At long last new funding sources have entered the secondary market for life insurance policies. Our firm, Veris Settlement Partners, currently has more face amount in closing than at any time in more than two years. Senior insureds with life insurance policies that are no longer needed, wanted or affordable once again have a viable alternative to lapse or surrender. For ideas on what works, here are some recent life settlement cases that have been funded by the new money that has entered the market:
Mrs. S, an 84-year-old woman with cancer and kidney disease
LEs (life expectancies) of 34 and 48 months
$1.8 million UL policy
Premiums to maturity of 6.2%, no Cash Surrender Value (CSV)
Policy issued in 2009
Gross offer of $760,000
Mrs. S needed the cash.
Mrs. J, a healthy 84-year-old woman
LEs of 125 and 137 months
$4 million UL policy
Premiums to maturity of 5.0%, no CSV
Policy issued in 2008
Gross offer of $250,000
Mrs. J no longer needed the policy and was very happy to receive the money
Mr. F, a 75-year-old man with heart disease
LEs of 114 and 146 months
$5 million UL policy
Premiums to maturity of 4.5%, no CSV
Policy issued in 2009
Gross offer of $350,000
Mr. F no longer needed the policy as well.
Mrs. B, a healthy 84-year-old woman
LEs of 103 and 105 months
$3 million UL policy
Premiums to maturity of 6.3%, no CSV
Policy issued in 2008
Gross offer of $230,000
Mrs. B no longer needed the policy as her dependents did not need the money
Mr. M, a 78-year-old man with recurrent prostate cancer and heart disease
LEs of 73 and 84 months
$1 million UL policy
Premiums to maturity of 6.4%, $24,000 CSV
Policy issued in 1992
Gross offer of $190,000
Mr. M overfunded the policy with $200,000 in premiums at issue. He no longer needed the policy and was able to receive nearly all his premiums back while having life insurance coverage for 19 years.
Mr. G, a 59-year-old man who is terminally ill
LEs in the 1-3 year range
$500,000 Convertible Term policy
Premiums to maturity of a converted policy would be 2.0%, no CSV
Policy issued in 2006
Gross offer of $360,000 (72% of Death Benefit)
Mr. G needed the money to pay for his medical care.
Mrs. A, a 79-year-old woman with heart disease and is severely overweight
LE of 105 months
$500,000 UL Policy
Premiums to maturity of 4.0%, $9,000 CSV
Policy issued in 2009
Gross offer of $50,000
Mrs. A was able to receive an offer that matched the premiums she put in for the past two years.
Mr. P, an 86-year-old man with diabetes
LE of 72 months
$500,000 Survivor UL policy (wife is deceased)
Premiums to maturity of 3.4%, $95,000 CSV
Policy issued in 2002
Gross offer of $160,000
Mr. P was ecstatic receiving this offer as the policy was no longer needed.
Mr. C, a 77-year-old man with heart disease
LE of 90 months
$250,000 UL policy
Premiums to maturity of 6.0%, no CSV
Policy issued in 1988
Gross offer of $30,000
Mr. C could no longer afford the premiums.
Life settlements can be a superior exit strategy versus a traditional surrender or lapse back to the insurance carrier. This option should be discussed with all senior insureds who have insurance that they might no longer need or want—some states even require it.
FA
Steve Shorrock has over three decades of executive experience in life insurance, including 14 as President and CEO of Bankers Life of New York, which is now part of Aviva. He is currently President of LifeVentures Corp, which designs new life insurance products and develops marketing concepts for agents, and Director of Veris Settlement Partners, a life settlement firm that brokers seniors’ unwanted or unneeded life insurance policies. You can reach him at his Northport, Long Island office at 631-239-6655 or steve@lifeventurescorp.com
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