GAO Study Finds that Life Settlements Deliver Almost 8 times Surrender Value to Seniors

July 28, 2010
The U.S. Government Accountability Office recently issued a long anticipated report on the state of the emerging Life Settlement market. One of the key findings, based on analysis of over 1,000 life settlement transactions, was that seniors selling their policies in a life settlement transaction received almost 8 times as much money as they would have had they surrendered the policy to the insurance company. “This confirms what we have been saying all along, life settlements are good for consumers and result in maximizing policy value for seniors who no longer want or need their life insurance policy” said Brian Smith, President of the Life Settlement Institute. For example, proceeds of a life settlement may help a senior pay for long term care.

Using just the 1020 policies relied upon in the study means that life settlements delivered $232 million more value to seniors than they would have received from the issuing insurance company. The study shows that seniors would have received $37.4 million if they surrendered their policy but instead received over $269 million from the life settlement transactions.

The study also found that although the vast majority of states have adopted pervasive regulation of the life settlement market, some have yet to do so and differences among state laws can be significant. Smith added “This finding also comes as no surprise to us. We have been working with state legislators and state insurance regulators to adopt consistent model legislation across the country and eliminate such discrepancies. Last year we helped get legislation enacted in several states including New York and California. However, there are 50 states and it takes time to get these initiatives passed. The National Conference of Insurance Legislators (NCOIL) Model Life Settlement Act is a very good bill and we will continue to support its adoption around the country.”

ABOUT LSI

LSI is a not-for-profit corporation formed in December 2001 to present the viewpoint of institutionally funded life settlement providers to consumers, state legislators and regulators, governing bodies such as the NAIC and NCOIL, and others. The current members of LSI are Life Equity LLC, Life Settlement Corporation d/b/a Peachtree Life Settlements, Maple Life Financial Inc., GWG Life Settlements and Fasano Associates.

LSI supports appropriate regulation of the life settlement market and promotes best practices within the industry. Specifically, LSI is dedicated to: increasing awareness by financial planning professionals and advisors of the life settlement industry; increasing the awareness of life insurance policyholders of the option of obtaining more value (where appropriate) for their policy than otherwise would be available from the issuing life insurance carrier; promoting the use of institutional financing in the life settlement industry; supporting laws and regulations that foster the use of institutional financing; and preventing fraudulent life settlement transactions.

For additional information, please visit www.lifesettlementinstitute.org

SOURCE Life Settlement Institute http://www.lifesettlementinstitute.org