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.
Though the credit default meltdown turned securitization into “a bad word,” settlements are not the next subprime mortgage disaster waiting to happen, he insisted.
“No one loses their house if they sell their policy,” Ziser said. “In fact, it might save their house.”
The industry gets a lot of media attention because “we’re unique and we’re odd,” said Stephen Terrell, vice president of marketing and public relations for Wm. Page & Associates’ Lifeline Program. In addition, he said, “we’re working with a group that is easily seen as being taken advantage of. The media will latch on to a story if seniors or children appear to be put in harm’s way.”
For this reason, employing skilled public relations is highly important for the industry. In dealing with the press, “be sure to put a positive angle on the industry–not be in a protection mode but in a truth mode,” he advised.
“Many consumers may not be aware of settlements, and we must take the opportunity to educate them”
Executives in the industry should talk to the media only if they are prepared, he advised. “The problem is, anything you say can be used. If you’re not clear on the message you give, you can be misconstrued and misquoted.”
In speaking to the press, he added, “be ready to be transparent and be prepared with success stories.” The vast majority of those who enter life settlements are happy, and while most want to be private, some would be glad to talk about their experience and could provide positive stories to journalists, Terrell said.
“Keep in contact with consumers you’ve worked with and be prepared to give their positive stories to the media,” he advised.