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Life Health > Life Insurance

The Life Settlement Process Could Soon Be a Lot Better

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The Life Insurance Settlement Association brought life settlement providers, life settlement brokers, and other life settlement industry players to Washington this week for LISA’s 24th annual spring life settlement conference.

LISA provided its usual great slate of sessions.

Nelson Taplin Goldwater Consultants’ Co-President Derek Wooley talked about how LISA is being more proactive about its regulatory efforts, and about how LISA and NTG have been promoting the life settlement market.

Traci Davis, from Elevation Underwriting, spoke about the latest advances in electronic health records and what these developments may mean for the life settlement industry. One challenge is that the information in the records is often spotty. But, one key advantage is that retrieving them may take just days, instead of weeks.

Scott Harris, from Magna Life Settlements, showed some of the key pointers and pitfalls of life settlement marketing. Among the pitfalls are regulatory concerns, such as the Health Insurance Portability and Accountability Act privacy rules for protecting the personally identifiable information collected from policy sellers. Harris also talked about the need for operational excellence, to reduce the number of touch-points needed with a life insurance policy seller.

(Related: Best Practices for Life Settlement Transactions)

Speakers Chris Conway, Vince Granieri, John Collins, Steven Shapiro and Michael Fasano participated in a panel discussion of short-form underwriting. Short-form underwriting is used in the life settlement and viatical settlement industries to more quickly arrive at a life expectancy estimate. Among the panelists’ recommendations was that life settlement firms should be the most conservative when the least amount of information is present. Panelists also recommended tailoring the short-form questionnaires to fit the demographics of the consumers who will be filling out the questionnaires.

Gregg Gottlieb, a Certified Financial Planner from Regal Wealth Advisors, and Jule Rousseau, a partner at Arent Fox, spoke about how the life settlement industry could improve, to make selling a life insurance policy easier. They suggested that reduced paperwork would make the transaction process less onerous for regular clients who want to sell their life insurance.

It was particularly interesting to see that nearly all speakers expressed frustration about the amount of time and effort needed to sell a policy. Transaction times often range from four to five months from start to finish, and can easily require more than 100 touch points between the buyer and seller.

I learned that several life settlement companies are either working on streamlining the process, or are already able to streamline the process, with the help of electronic health records and short-form underwriting.

Short-form underwriting alone can save weeks, when compared with traditional long-form underwriting, by letting a life settlement firm estimate a policy seller’s life expectancy based on a medical questionnaire instead of full medical records. This approach has the potential to not only transact a much larger number of policies before they lapse, but also to make a life settlement or viatical settlement transaction much more accessible for millions of American seniors.

Currently, those seniors are needlessly losing more than $112 billion in life insurance wealth every year.

I was also intrigued by the new entry of other forms of state-of-the-art technology into the industry.

A recently founded blockchain startup, LiST, is working on turning life insurance policies into tradeable liquid assets by building a blockchain based platform. This means that there could soon be a new way to fund the sale of life insurance policies at a global scale.

Felix Steinmeyer (Photo: FS)

Felix Steinmeyer  is the chief executive officer of Mason Finance Inc. of San Francisco. He is a licensed life insurance settlement provider and member of LISA.


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© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.