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Ask the expert: Life expectancy reports

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The question was: Some life settlement clients tend to be put off by the news that a “life expectancy” report will be done. What should I explain to them about these reports in relation to the settlement transaction?

The answer is: You could say that a life expectancy report should be obtained if there is any disability.

At the moment, I am looking at one life settlement case where the appraised value increased 86% just because of disability.

You could add that a LE report is worthwhile even when there is no disability. That is because the report can be used as a life-planning tool, since a well-crafted LE includes diagnosis, mortality curve, and health expectancy.

Finally, depending on the results of the report, it can even cheer the client up!

John M. Bragg, FSA, ACAS, MAAA,
Actuarial Consultant
Bragg Associates
Atlanta, Ga.
[email protected]