Life Insurance Policies Bought from Seniors by
Investors Draws Aging Committee Focus
Senate Committee hearing on Wednesday to see evidence
of lack of protection for senior citizens in life settlements market
April
28, 2009 – The Senate Special Committee on Aging will hold a hearing
tomorrow to learn more about the booming life settlement business -
selling your life insurance policy to investors who hold it until you
die and reap the profits. Packages of these purchased life insurance
policies are now being bundled as investment vehicles.
Committee Chairman Herb Kohl (D-WI) will hold the
hearing on the burgeoning life settlement market, which has doubled in
value since 2006. The committee says the industry is now a $12 billion
market and says analysts expect it will exceed $160 billion within a few
decades.
A life settlement is a financial arrangement in
which a person sells their life insurance policy to investors, who
continue to pay the policy premiums and collect the payout upon the
seller’s death.
The aging committee says an investigation has
uncovered unintended consequences for consumers, sales and marketing
abuses, and insurance fraud, all of which are exacerbated by the high
commissions earned by life settlement brokers.
Despite these transferred life insurance policies
now being bundled by some of the largest investment companies in the
nation, neither the Internal Revenue Service nor the U.S. Securities and
Exchange Commission have issued relevant regulations to govern the
industry.
Trading in life
insurance policies driven by investor demand, seniors needing cash
A viatical or life
settlement is the sale to a third party of an existing life
insurance policy for more than its cash surrender value but less
than its net death benefit. Regulatory usage of the terms
“viatical settlement” and “life settlement” varies by state.
Life Insurance Settlement Association
Oct. 24, 2007 - From
virtually no activity just 10 years ago, investment managers are today
raising capital by the bushel and on a global scale to invest in the new
asset of life settlements. The result is an increasing number and value
of life insurance settlements being sold to meet growing capital
demands, according to a new study by Conning Research and Consulting,
Inc. Senior citizens in need of cash are hot targets for life settlement
buyers. Read more...
The hearing, “Betting on Death in the Life
Settlements Market – What’s at Stake for Seniors?,” will begin at 2 p.m.
in Room 106 of the Dirksen Senate Office Building.
Those expected to testify include”
● Stephan Leimberg, CEO, Leimberg Information
Services, Inc., Havertown, PA.
● Mary Beth Senkewicz, Deputy Commissioner, Life
and Health Insurance, Florida Office of Insurance Regulation,
Tallahassee, FL.
● Michael McRaith, Director, Division of
Insurance, Illinois Department of Financial and Professional Regulation,
Chicago, IL.
● Fred Joseph, Commissioner, Division of
Securities, Colorado Department of Regulatory Agencies, on behalf of
North American Securities Administrators Association (NASAA), Denver,
CO.
● James Avery, Jr., President, Individual Life
for Prudential Financial, on behalf of American Council of Life Insurers
(ACLI), Newark, NJ.
● Scott Peden, President, Life Partners, Inc.,
Waco, TX.
Alan Buerger, Chief Executive Officer, Coventry,
Fort Washington, PA. has also been invited, the committee says.
April
28, 2009 – The Senate Special Committee on Aging will hold a hearing
tomorrow to learn more about the booming life settlement business -
selling your life insurance policy to investors who hold it until you
die and reap the profits. Packages of these purchased life insurance
policies are now being bundled as investment vehicles.