There are many different ways to care for one’s future, particularly in older age. However, those who have exhausted most of their options and are looking to use one of their potential assets as a way to garner more funds may want to consider a life settlement policy. For those who are unaware a life settlement is a transaction whereby a life insurance policy is sold for more than the surrender value, but less than the death benefit. These days, the competition between life settlement companies is tough, meaning that many company may use pressure tactics, poor information, and other methods to secure one’s business.
Therefore, the best way to protect oneself is to use a company that can be trusted and counted on. With that, this review would like to introduce a potential option called Life Settlement Solutions (also known as LSS, for short).
What is Life Settlement Solutions?
Life Settlement Solutions is a life settlement company that functions as a brokerage – that is, it is not a party that will directly purchase life insurance policies. The company mentions that it is a “leader in the life settlement industry” – like most companies claim they are. Regardless, this company works to ensure that the transaction is equitable for all parties involved, including the insurance policy seller, the broker, and the buyer. By using the right standards for life settlements, parties can get the benefits from the transaction that they deserve.
Life Settlement Solutions Licensing
One of the most important qualities to look at before choosing a life settlement company is its licensing. All too often, individuals find themselves transacting business with a company that is not licensed in their state, thereby leading to a precarious and undesirable situation. Rather than put oneself at risk, the best thing to do is to verify licensing first.
In this case, Life Settlement Solutions is not licensed in all 50 states. Rather, there are a number of states that the company is not licensed in, which include Alaska, Hawaii, Idaho, Kentucky, Minnesota, Montana, Nebraska, New Hampshire, North Dakota, Utah, Vermont, West Virginia. Further, keep in mind that these are the states that the company is licensed to transact life settlements. Some states have special regulations and licensing requirements for viatical settlements as well, which this company may not perform – at least, according to its website.
The Purpose Of The Brokerage
There is a difference between selling a life insurance policy directly to a company or through a brokerage. A brokerage functions as a sort of “middle man” – it helps facilitate the transaction between the life settlement company and the individual insurance holder. Further, very different from most other companies, Life Settlement Solutions mentions that “it does not employ brokers, and no broker is authorized to act as an agent or representative of Life Settlement Solutions.” This could very well mean that the company provides brokers with the tools and resources that they need and then purchases the policies when the brokers have ones that they can offer.
Further, another important aspect to be aware of is that Life Settlement Solutions mentions that it does “not sell or re-sell life insurance policies to individual members or settlement purchasers.” Rather, the policies are acquired by the company and then they could be transferred to a custodial trustee for a financial institution that has been pre-qualified as an accredited investor. This means that Life Settlement Solutions bundles the policies up, turning them into death bonds, and quick makes them into a security. The company then sells them to an accredited investment companies that are accredited under the SEC and that meet the Federal Securities Act of 1933.
Those who transact with Life Settlement Corp should look at the privacy policy to discern what happens to personal information once the policy is transferred to an institutional investor. This way, users can protect themselves and their information best.
Overview Of The Transaction
Rather than state that the company “purchases” or “buys” policies, Life Settlement Solutions states that it is “structured to acquire.” While acquire could mean purchase or buy, the company does not use these words and therefore it could be that the company simply acquires the policy through acting as a middle man type of service. Here is an apt analysis of the company’s policy transaction overview that may help individuals determine whether this company and its practices are right for them:
Locating An Eligible Policy
First, the company locates an eligible insurance policy. Various life settlement companies have criteria that policy holders must meet in order to ensure that their policy is eligible to be sold. For example, a few of the criteria that the company analyzes are the individual’s age, health, life expectancy, the source of the insurance policy, the value of the insurance policy, and the type of insurance policy. Once it is found that the individual meets the company’s criteria, the next step occurs.
Determination Of Bid Price
Second, if the pricing of the policy and the evaluations go well, the company will determine a bid price that may work well for investors. The policy must meet the company’s capital funding sources. Once all of these elements are met, the offer is send to the individual policy holder.
Accept Or Decline The Offer
Third, after the offer is sent to the individual, they have the ability to decline or accept the offer. If the offer is accepted, the owner will then need to go through the step to relinquish ownership and the beneficiary’s interest in the policy. In exchange, the policy holder receives a cash payment that has been held in escrow upon acceptance of the bed.
The Death Benefit
Finally, upon the death of the policy holder, the death benefit is given to the company that invested in the policy. The amount derived from the policy is termed the “yield” in the industry and it provides the investor with a profit. At this point, the family of the original policy owner have no interest in the yield.
These are the main features of the transaction that takes place between the policy owner, the company, and investors. Throughout the process and as individuals will notice on the company’s website – the company is not very clear about its role in the process. It certainly does not directly purchase the policies, but rather, it “acquires” the policies. It is likely that the companies acquires those policies from brokers and then holds onto them for institutional investors.
For instance, as the company mentions, “the company purchases life settlements on behalf of several European-based institutional investment funds.” Therefore, Life Settlement Corp does not directly receive the death benefit of any policies that it acquires, but rather, sells to them institutional investors as securities so that they may derive a yield on their investment.
The Treatment Of Non-Public And Personal Information
At this point, it is possible to discern that Life Settlement Corp is a third-party dealer in the life settlement transaction. Meaning, this is the company that acquires the policies from brokers or other corporations. As a result, it is important to recognize how the company will treat one’s personal information. After all, there are some companies that will divulge and use personal information to their benefit, which can be worrisome.
In this case, Life Settlement Corporation mentions that it is in compliance with the Gramm-Leach-Bliley Act. This Act identifies the procedures and policies that a company must use in treatment and handling an individual’s personal information.
The Type Of Information The Company Receives
Life Settlement Solutions typically receives identifying information, such as a name, address, email addresses, social security numbers, license numbers. In addition, policy information includes medical and health information, life expectancy evaluations, personal policy information, and the like.
What The Company Does With The Information
The company mentions that it collects the information to determine whether the policy is viable to acquire. Importantly, the company states that it “does not sell any of the nonpublic personal information regarding the policy owner or insured individual, nor does it distribute such information to any third parties except as required or permitted by law.” Keep in mind that this statement is dependent upon the term “nonpublic personal information.” For example, if one’s address, phone number, name, and other personal information does not fall under the definition of “nonpublic personal information,” then the company may disseminate it.
Access To The Information
Access to the nonpublic personal information is given to the company’s employees to facilitate the transaction. In addition, it may also be given to unaffiliated companies but only to the extent necessary to conduct business with the company and to ensure that the transaction is completed in a timely manner.
Life Settlement Solutions Summary
Overall, Life Settlement Solutions provides very little information, some of it conflicting, concerning its role in the Life Settlement Transaction. What is certain is that the company does acquire the policies, either through a broker or by other means, to sell to institutional investors for securities purposes. On the other hand, the benefit of this company is that it does seem to secure the information and keep it confidential. By understanding the various parties in the transaction, individuals can make better decisions for their funds and their life settlement.
