Life Settlements identity crisis

"The LISM can benefit itself and millions of seniors by following the lead of the reverse mortgage industry, which, after years of slow growth, awakened millions of seniors to substantial value in their homes that could be converted into retirement funding. This was accomplished with a proactive industry promotion program," the study's conclusion notes. "As the LISM continues to evolve and grow, it will receive more attention from the media. Regardless of the nature of the media's portrayal of life settlements, if LISM stakeholders do not communicate their message to the senior public then they are choosing to let others communicate a message that may not be to their liking. If the LISM stakeholders want to have a say in the public's perception of life settlements, it needs to take a more proactive approach to communicating the value of life settlements to seniors."

The study brings up plenty of interesting statistics and observations. Here are some examples:

• "88% of all universal life policies and 85% of all term policies never result in a death claim. When applied to policies issued to seniors aged 65 and older, the percentages are 76% and 74%, respectively." These unfulfilled policies, which seniors surrender or allow to lapse, may be eligible for sale in the LISM.
• "During the years 2005 to 2006 the LISM expanded rapidly as many new stakeholders entered into the market and industry growth was sufficiently strong to generate business. In these times, special promotion and public relations for the LISM was not deemed necessary. In late 2006 and through 2007, attention turned to legislation and regulation as a result of certain bad practices and lawsuits. As the subject of STOLI became popular, LISM stakeholders and insurers sought to distance themselves from such practices. During this period, the LISM stakeholders focused on lobbying to ensure the passage of life settlement laws that would protect seniors and be favorable to the industry. Again, most of the industry's efforts were devoted to lobbying and not on public relations or self-promotion to senior consumers."
• "With the capital markets' turmoil in 2008 and 2009, LISM industry stakeholders found a host of new challenges. At the same time, the crisis brought into focus the need for seniors to find liquidity to augment retirement funding and the need for investors to seek investment in assets that are not correlated to market swings. Life settlements generally meet these criteria, but their existence and benefits have not been adequately communicated to seniors."

The complete study is available for download from the ISI Web site at www.insurancestudies.org/research.html.

Life settlements also gets the "Main Theme" treatment in the upcoming October issue of Life Insurance Selling, with a research study from Life Policy Dynamics, a complete legislative update, and four elite life settlements producers taking on the hot topics of the day in our "Producers Roundtable" feature.