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,