Life settlements get a bad rap. Yes, there are bad practices taking place with the sale of the product. That particular aspect of the product gets discussed ad nauseum. So, at least for this one column, I wanted to go inside the numbers to see what we can find out.
The Keystone, Colo.-based Insurance Studies Institute released its annual Life Settlement Senior Survey. According to the “insurance industry think tank,” the survey was put in the field to “learn the role life insurance plays in senior lives, specifically regarding the option to sell life insurance policies.”
The following are the findings from the study:
- Of 218 seniors surveyed nation-wide, 73 percent indicate that life insurance was originally purchased to provide for beneficiaries, but that needs have changed over time, and the other 27 percent purchased policies for other reasons.
- Fifty-one percent were not familiar with the option to sell unwanted or unneeded policies, known as a life settlement. This corresponds to data obtained in previous ISI surveys. Of the 40 percent who have lapsed or surrendered a policy, 61 percent would still rather lapse or surrender the policy after reading a simple definition of a life settlement.
- Sixty-nine percent of the respondents did not express concern with an investor owning a policy on their life.
According to Christopher Kampa, Director of Research at the ISI: “Survey respondents are curious about the life settlement option, but lack understanding about having an investor own a life insurance policy on their life.”