By Philip Giordano.
Whatever happened to that industry?
Can you still do that?
Isn’t that illegal now?
These are some of the common questions I’ve heard from agents and advisors over the past couple of years when I mention Life Settlements…and understandably so.
Life Settlements started making it’s way into the financial product scene in the early 1990’s, but really started picking up steam about 10 years ago. As stories of substantial offers to clients and large commissions began circulating amongst the financial advisor forums, many began running to the industry to learn more and participate in what seemed to be the “next best thing”. And about just as many ran from it thinking something had to be wrong.
In some ways, both parties were right.
Then, in 2008, the perfect storm hit the industry:
- Insurance companies, investors, agents and insureds began suing one another;
- Life expectancy companies changed their mortality tables 25%+;
- Different sets of conflicting regulation began popping up in state after state
Couple all of that with the largest financial crisis since the Great Depression and it’s no surprise many are wondering today if “you can still do that?”
The good news is, you absolutely can.
As the saying goes, if it doesn’t kill you, it will make you stronger, and the life settlement industry is no exception. Having survived the turmoil over the last 5 years, the life settlement industry is stronger. That’s not to say the market is larger based on total face value transacted per year; but stronger as an accepted financial product that is now regulated in 42 states and is here to stay for the foreseeable future. Litigation has largely been settled or dismissed, and major changes to life expectancies are no longer expected (barring a cure for cancer). These developments have collectively encouraged investors looking for a strong return to consider life settlements once again.
While the rate of closings is not close to their peak in 2008 ($12 billion in face value); life settlement business is warming up. Recent life settlements through just our company are outlined in the following table.
The box has shrunk for which policies qualify for a life settlement and every senior over 65 years old with a policy definitely does not qualify. Furthermore, keeping their life policies is often times the best alternative for the client and their families. However, in situations where premiums are too expensive, cash needs arise and/or a policy is no longer needed for whatever reason, exploring a life settlement can be the best alternative for the insured and result in a commission to advisors.
Philip Giordano is President and Owner of Strategic Financial Services and Senior Financial Solutions, Inc. (SFS), located in the city of La Mesa, just east of San Diego, California. SFS has specialized in helping clients and advisors with life settlements for over 8 years. To reach Philip Giordano call: 619.337.0890 ext. 1 or e-mail: firstname.lastname@example.org.