One of the myths and misconceptions surrounding life insurance settlements is that they take advantage of the terminally ill and elderly, said William Scott Page, chief executive officer of Wm. Page & Associates Inc., Atlanta, at a recent webinar.
"That's not true," he said. "No one forces anyone to sell their policy."
Consumers understand exactly what's involved when they sell their policy, because the typical settlement deal takes four to eight weeks to complete, he noted.
Rather than poor consumer protection, a bigger concern for the settlement industry is to protect itself against dishonest consumers, such as those who exaggerate their health status, said Page.
"We need to verify the information on the original application for a policy," he said. It's up to the settlement firm to go back to the original app and request medical records to verify the individual's health claims, he added.
"We have to provide clear protections for investors," he said.
Held by the International Society of Life Settlement Professionals, Scottsdale, Ariz., the webinar focused on securitization of life settlements, which could be an important financing tool for the industry, participants agreed.
Just as securitization of mortgages led to lower home loan rates for consumers, life settlements could also benefit from the practice, said Boris Ziser, partner, Stroock & Stroock & Lavan L.L.P., New York. By helping to increase competition in the industry, the practice should result in better pricing for consumers, he said.
