Life Settlements better than Lapsing

Life settlements can theoretically work to reduce lapse rates, because the investors who buy the policy will always contribute just enough money to keep it paid up until it pays off. If all life insurance consumers learn about life settlements and sell their policies before they lapse, the lapse rates would go to zero and the life insurance agencies would be forced to increase rates. This would make life insurance less competitive against other investment methods, and probably lead to lower sales.

But if you think that any of this causes the life insurance companies to worry, you’re wrong. Life insurance companies know that any loss of sales due to larger premiums will probably be more than offset by the increased sales due to people who start buying life insurance policies as investments with the thought of later selling the policies to fund retirements. Life insurance companies had always been somewhat embarrassed by lapse rates anyway, since they tended to indicate that policies had been improperly sold in the first place. Also, life insurance actuaries already assume and factor that a certain number of policyholder’s will have health declines, and thus will hold their policies until their death. From an actuary’s standpoint, the concept of life settlements in causing losses to the insurance companies isn’t nearly as onerous as the insurance agents try to paint it out to be when making a sale.

Finally, the life settlements markets are limited to a relatively small part of the market since they are only for people over 65 and who have had a dramatic health change. This group probably represents less than 0.5% of all life insurance policies, so life settlements probably are not going to impact life insurance profitability that much. It is, however, an argument that life insurance agents falsely use to try to portray the insurance companies as the big losers, and not the kids of those who are selling their policies.

Life Settlements are a great tool for seniors who were thinking about lapsing or surrendering their life insurance policy.

Life Settlements Broker

Reason for Life Settlement Brokers

Perhaps you have decided to allow your life insurance to lapse because the payments have just become too expensive for you to maintain, or you have other bills that need attention and right now paying your life insurance falls pretty low on the priority list. You might have also thought about taking the cash surrender payout. Instead of letting your life insurance lapse due to non-payment of the life insurance premiums, you may want to discuss your situation with a licensed life settlement broker. You may have already spoken to your insurance company about having them purchase the life settlement value of your life insurance and you are trying to decide if you should accept their offer. (In most cases, a life settlement broker can provide a much larger settlement than the Insurance Company cash surrender) Before you do, why not take a few minutes and obtain a second opinion from a licensed life settlement broker such as RTG Consultants or Life Settlement Pro.

Life Settlements were created for the consumer, it gives you another option versus having to lapse or surrender your policy.

Life Settlements (Viatical Settlements)

Life settlements or viatical settlements as they are also known is the process of selling the cash payout of your life insurance or portion thereof for upfront cash.

So why would anyone sell their life insurance benefits? Well in some cases, the life insurance might be no longer necessary. If for instance the policy was secured to protect a dependent or spouse but that beneficiary dies first, then that need for protection no longer exists.

Other times, a portion of the life insurance policy proceeds might become necessary to pay off bills, prevent foreclosure, pay health related expenses, or just simply to live on. John Meecham was diagnosed with terminal cancer and was unable to work. The house payments had gone unpaid for several months and disaster seemed imminent. By selling off half of his $2 million life insurance policy, John was able to pay off his house and do a bit of traveling with his wife before he died a year later.

How life settlements (viaticals) work

Viatical settlements are pretty straightforward. A policyholder who can demonstrate that he has been diagnosed with a terminal illness sells his policy to a settlement company for a fraction of its face value, depending on estimated life expectancy. People over age 70 can also often find buyers as well.

With the life insurance policy in now owned, the purchasing company solicits investors who receive the death benefit when the viator dies. Out of its portion of the investment, the viatical company pays premiums on the policy to keep it in force until the viator dies. In some cases, the company may require that investors pay the premiums.

Any type of insurance can be used in a "viatical settlement" including whole life, universal, term, or group life provided by an employer. But the policy must allow the viator to assign, or transfer, it to an unrelated beneficiary. The viator must have owned the policy for at least two years before he/she sells it. This is done to prevent people from taking advantage of insurance companies by taking out and then selling a life insurance policy when they receive a terminal diagnosis.

Life settlement (viatical) warnings

Viators who are ill and often desperate may be at the mercy of viatical companies. Under a regulation developed by the National Association of Insurance Commissioners (NAIC), viators would be guaranteed to receive a minimum payment that is based on a sliding scale according to life expectancy.

For instance, a viator with an estimated life expectancy of six months would receive 80 percent of a policy's face value, but someone expected to live 18 to 36 months would receive 60 percent. To date, however, just nine states (Arkansas, Connecticut, Kansas, Louisiana, Maine, Minnesota, Mississippi, Oklahoma, and Vermont) have chosen to adopt the payment schedule.

If you plan on selling off part of your life insurance policy for cash, it is highly recommended that you see a lawyer who is experienced in the value of such things. It may take a few extra days or you may have to do some shopping, but viatical agreements can vary tremendously in the amount of money you can pull out.

In one recent study, the same insured with the same policy and same conditions received quotes from 22% of face value to over 60% of face value. Do your shopping and don't take the first offer. In the same study, it was found that there was room for negotiation and life settlement buyers often came back with larger offers when the first was turned down.

Disclaimer: These pages are created to inform and educate the public only. They are not and should not be considered legal opinions or advice. You do not and cannot have any client-attorney relationship with SeniorMag or any of its employees. You should not act upon legal advice found on SeniorMag and are advised to seek professional counsel before taking any action based upon information found on this site.

Venture Capital Investments Rise Slightly in Connecticut

The Stamford Advocate, Stamford, Conn.

Aug. 9--Venture capital funding in Connecticut remained essentially flat during the second quarter, with venture investments rising just slightly compared with the first quarter.

Seven Connecticut companies, including two local businesses, raised $27.9 million in the second quarter, up from $24.1 million raised by venture-backed firms in the first quarter, according to a national MoneyTree Survey issued by PricewaterhouseCoopers, Thomson Venture Economics and the National Venture Capital Association.

Second quarter funding was down significantly from the same quarter of last year, when $51.1 million was invested in 11 companies, the survey found. "With only $52 million raised to date this year, companies in Connecticut will need to have strong fundraising results in the second half of 2005 to achieve historical averages," said Owen Davis, co-chair of PricewaterhouseCoopers' venture capital/private equity practice in Connecticut and Westchester County.

Nationally, venture capitalists invested $2.4 billion during the quarter in 750 companies.

The largest investment made in Connecticut went to Kelson Physician Partners Inc., a Hartford-based pediatric healthcare company, which received $15 million. This was the company's 11th round of funding. The majority of funding went to late-stage and emerging-stage companies, according to the survey.

One of those companies was Norwalk-based Reconda International Corp., a provider of Web-based software products for WebSphere MQ messaging application development, testing and support. The three-year-old company raised $300,000 in its ninth round of funding. This is the second round the company received this fiscal year. It employs 25 people and has two commercial software products. Another local business, Stamford-based LifeOptions LLC, was the only venture-backed company in Connecticut to receive first-round funding. The company, a life settlement brokerage firm, received $1 million, said Chief Financial Officer Ted Pryor. The money will be used for working capital as the company, which was launched in May, looks to broaden its reach in the Northeast.

LifeOptions focuses on the secondary life insurance market by working with senior citizens and life insurance agents to sell unwanted life insurance policies to institutional investors.

"We put a lot of time into our business plan, both in terms of the description of the plan and in terms of the numerical analysis on what we could project," Pryor said. "It's a big market and we were able to convince our investors it was an underserved market -- at least in our region." "Life settlements are the fastest growing fixed asset class in the country today, so we saw a market opportunity," said Jim Pugliese, LifeOptions' president.

While start ups have been hard-pressed to capture venture capital dollars since the dot-com bust, that may change soon, said Matthew Littlewood, who follows venture investments in New England for PricewaterhouseCoopers. There was a growth in later-stage investing during the second quarter -- an indication that venture capitalists feel their investments are maturing and ready for exit. That will mean a flurry of acquisitions and initial public offerings in the region, which will give investors more cash and time to focus on start-ups again, Littlewood said.

Life Partners Announces European Fund Development At Annual Meeting of Shareholders

WACO, Texas--(BUSINESS WIRE)--Aug. 4, 2005--Life Partners Holdings, Inc. (Nasdaq:LPHI) held its 2005 Annual Meeting of Shareholders at its headquarters this morning at the company headquarters in Waco, Texas marking nearly 14 years as the world's oldest and only publicly held viatical and life settlement company.

At the meeting, Chairman and Chief Executive Officer Brian Pardo said, "We have always been on the leading edge of developing this asset class. We have opened markets for thousands of sophisticated individual investors and are now finding durable ways to work effectively and profitably with institutional clients as well."

Discussing the Company's future growth opportunities, Mr. Pardo said, "The future of our company rests in our ability to serve both client bases with equal effectiveness. As an example of this strategy at work, I am pleased to announce that The Life Settlements Fund, a Bahamas registered fund with representative offices in London and Zurich, has now begun to purchase life settlements using our company as exclusive investment advisor and policy provider to the fund."

Based solely on business from this Fund, the company expects an increase in total business volume of about $6 million during this current fiscal quarter which ends August 31, 2005. Further, we expect even greater increases of total business volume throughout our second fiscal half and beyond.

The Life Settlements Fund is available only to non-U.S. investors and is marketed throughout Europe, the Middle East and the Caribbean.

Approximately 98% or 9.2 million shares entitled to vote were represented at the meeting either in person or by proxy. Shareholders elected all six directors named in the proxy, with each director receiving at least 8.5 million or 93% of the total votes cast. Brian Pardo, R. Scott Peden, Jacquelyn Davis, Tad Ballantyne, Fred Dewald and Lt. General (Ret.) Harry Goodall were all elected to serve for the ensuing year.

Safe Harbor - With regard to Life Partners, Inc. and Life Partners Holdings, Inc., this press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those projected in the forward-looking statements as a result of various factors. The statements in this news release that are not historical statements, including statements regarding future financial performance, the market for our services, and the value of our new contract signings, backlog and business pipeline, are forward-looking statements within the meaning of the federal securities laws. These statements are subject to numerous risks and uncertainties, many of which are beyond our control, that could cause actual results to differ materially from such statements. For information concerning these risks and uncertainties, see our most recent Form 10-K. We disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by law.