LISA Partners with Member Firms to Promote Life Settlements at RIA Summit

As part of our pro-active campaign to educate Americans about life settlements as an important option for seniors, LISA recently created a national “speakers bureau” program in which we’re partnering with member firms to place thought leaders from our industry on the podiums of select conferences. We’ve already secured two such speaking engagements and have several more opportunities in the works.

As part of our pro-active campaign to educate Americans about life settlements as an important option for seniors, LISA recently created a national “speakers bureau”

As part of our pro-active campaign to educate Americans about life settlements as an important option for seniors, LISA recently created a national “speakers bureau”

The first one took place last week at the Registered Investment Advisors (RIA) Summit in Las Vegas. I had the privilege of moderating a panel discussion that included Gary Brown, chief executive officer of CMG Life Services Inc., and Clay Gibson, Senior Portfolio Manager, Vida Capital.

Our goal for the session was to provide an overview of life settlements and to position them as an attractive non-correlated alternative asset class for institutional investors. We set out to educate the audience about how institutional investors are exploring the life settlement market, uncovering value and finding new business opportunities.

Some of the highlights covered in our session included:

  • It is settled law that life insurance is personal property and it is the right of an insured/policyholder to sell their life policy;
  • Over the course of the next decade, the life settlement market will exceed $100 billion of face value annually, fueled by the aging baby boom population that will be seeking to augment their financial needs for retirement and rising health care costs;
  • Forty-two states regulate life settlement transactions and six have moved to require insurance companies to advise policyholders of the availability of a life settlement as an option to lapsing their policies;
  • Over the past five-plus years, the secondary market has become a respected environment where billions of dollars in face value of life insurance policies can be transacted between policyholders and institutional investors.

This panel discussion created a platform for LISA to partner with two of our member firms to provide an overview of the market, discuss the current practices and trends in transacting business, and provide insights from lessons of the past and future opportunities for this unique asset class. Gary and Clay also had the opportunity to meet one-on-one with RIA members and discuss specific business development opportunities.

There are still a number of conferences we would like to target for LISA-moderated panel discussions regarding life settlements. If you would like more information about how your firm can participate in the LISA Speakers Bureau, please contact Wesley Costa at

Lapsed Life Insurance Policies: An Astounding Number


The number and amount of lapsed life insurance policies by U.S. seniors over age 65 is astounding: more than 250,000 policies with a combined face value of more than $57 billion are lapsed and surrendered back to life carriers each year. The average face value of those policies is approximately $225,000.

And that only includes universal and variable life policies that most people think are best-suited for life settlements. If term life is added, which often includes policies that are also attractive for life settlements, and ordinary life policies, the total exceeds $112 billion.

Lapsed Life Insurance Policies: An Astounding Number

Lapsed Life Insurance Policies: An Astounding Number

These amounts are based on publicly available information as of 2010. The number and amount of face value of policies today is certainly greater.

John Welcom, founder and chief executive officer of Welcome Funds, presented this research earlier this week at LISA’s Fifth Annual Institutional Investor Conference in New York. Previous studies have provided estimates about the overall size of the life settlement market based on analyzing the total amount of life insurance inforce. This is the first work that is based on the number and face value of policies lapses and surrendered back to life carriers.

What makes the study relevant? It validates the need for a marketplace where seniors who have policies that are no longer needed or perhaps affordable can realize a value often many times greater than its cash surrender value. The study provides the foundation for LISA’s mission to educate American consumers and their financial advisors about an important option for potentially unlocking billions of dollars of hidden value in life policies that could provide valuable financial resources in retirement.

Think about it. Seniors who held more than 250,000 life insurance policies either unconsciously or knowingly allowed those policies to lapse. Billions of dollars of potential “real value” was surrendered back to life companies for no value.

Meanwhile, a survey by the Insurance Studies Institute reported that less than 50% of seniors are aware about the option to consider selling their life policy. Further, 90% of seniors who had lapsed a policy would have considered selling it if they had known a life settlement was an option.

Thanks to this new research, we now have a benchmark for the serious amount of financial value available to seniors over age 65 from the possible sale of their life insurance policies. Now more than ever, there is an enormous need to educate seniors and their advisors about the alternatives available to lapsing their life insurance policies.

LISA must take on the responsibility to provide this consumer education and to help foster a robust life settlement market.

The Myth of the 150th Birthday: Science and Life Expectancy

You’ve likely heard it said that the steady increase in life expectancy over the past several decades is evidence that advancements in medical science have enabled us to extend human life and that it will soon become common for Americans to live to be 125, 135 or even 150 years old.

 Well, maybe not so fast.

The Myth of the 150th Birthday: Science and Life Expectancy - Life Settlement - LISA.ORG

The Myth of the 150th Birthday: Science and Life Expectancy

At the Life Insurance Settlement Association’s 2014 Annual Fall Life Settlement and Compliance Conference, which was held last month in Scottsdale, Ariz., the keynote speaker for the general session was Jay Olshansky, Ph.D., professor at University of Illinois at Chicago’s School of Public Health. Dr. Olshansky reviewed some of his research into estimating the duration of life, which indicates that although advancements in science and medicine are extending the average life expectancy for Americans, it is unlikely to ever create conditions where Americans are routinely able to live 100 years or more.

“In spite of what you may read on magazine covers and newspaper headlines, the truth is that the timing of death in human beings has never really changed,” said Dr. Olshansky. “It’s certainly true that a larger number of people are living longer today than in the past – and that trend will continue – but life span itself is unlikely to change and we’re just not going to see a whole generation of Americans suddenly living to be 120 years old. We have fewer infant deaths than we did in the past, but in return we now have more people dying from cancer, heart disease and dementia in their 80s.”

Having attempted to bust the myth of the 150th birthday, Dr. Olshansky and his academic colleagues have dug deeper into the data regarding life span and have also turned up a startling conclusion with broad social implications: the gap between the life spans of highly educated Americans and their uneducated peers is as much as 15 years.

 “There really are two Americas,” said Dr. Olshansky. “The best-educated among us are doing very well financially and living longer, but the least-educated of us are lagging far behind economically and experiencing declines in health that lead to shorter lifetimes. In studying life expectancy tables, even a one-year gap would be large; a 15-year gap is simply monumental.”

Dr. Olshansky’s work is part of a body of research that is allowing academics and actuaries to more precisely model life expectancy among various population groups in the U.S. This new scientific research is extremely important to the life insurance industry as it has profound implications for underwriters who ultimately frame the way that insurers set premiums for each unique policy they issue. It’s also of great importance to the burgeoning life settlement industry as it helps consumers, financial advisors and investors all obtain a more transparent and predictable understanding of which life insurance policies are appropriate for settlement.

All of us in the life settlement market – consumers, advisors, brokers and investors – benefit from more accurate data and a more precise understanding of life expectancy. We should be open to innovative research into human longevity and be willing to challenge our traditional thinking about life expectancy when new data becomes available, even if that research and new data seems out of the box to us at first glance.

And if Dr. Olshansky’s research is correct, the first lesson to be learned is that the birthday cake with 150 candles on top isn’t likely to be making an appearance in your kitchen any time soon.

Life Settlement Association adds keynote speakers and attorneys from high profile case Larry Grill, et al. v. Lincoln to its Fall Conference Oct 5-7.


The Life InsuranceLISA-Blog Settlement Association (LISA), which educates consumers and financial advisors about options for unlocking the hidden value in life insurance policies, today announced a key addition to its final agenda for its 2014 Annual Fall Life Settlement and Compliance Conference on October 5th-7th at the Omni Scottsdale Resort & Spa in Scottsdale, Ariz.

Key speakers and attorneys, Gordon A. Schaller, prominent tax and estate planning attorney in Southern California, Partner, Jeffer Mangels, Butler & Mitchell LLP, along with Daniel L. Warshaw, civil litigator and trial lawyer, partner of Pearson, Simon & Warshaw, LLP, will be present and provide an overview of the recent lawsuit that has drawn nationwide attention, Larry Grill, et al. v. Lincoln National Life Insurance Co., filed in federal district court in California. In this case, the owners of a life insurance policy brought suit alleging claims for fraudulent concealment stemming from the carrier’s failure to inform them of the existence and possibility of selling their policy into the secondary market.

“This is an important case for the life settlement industry because it’s one of the first lawsuits alleging that life insurers have an affirmative obligation to disclose the existence of the life settlements option” said Darwin Bayston, President and CEO of the Life Insurance Settlement Association.

While nearly 80 percent of baby boomers and seniors are interested in life settlements as a means to supplement retirement finances, many seniors — and many of their financial and legal advisors — are not aware that a life insurance policy is personal property and may be sold as a life settlement for a value greater than its cash surrender value. “As a result, billions of dollars (face value) of policies that are no longer needed, wanted or affordable are lapsed and surrendered back to life insurance carriers by seniors who might have sold them for a cash payment” says Bayston.

Gordon A. Schaller along with Daniel L. Warshaw  are scheduled to speak on Monday October 6th at 2:30 PM.


2013 Conning Report – A Treasure Trove of Information

LISA-200X100In early January Conning, Inc. released their 2013 report, “Life Settlements, A New Opportunity in Smaller Policies”.  The report offers a treasure trove of information for our industry.

Three things stand out in the report.  First, Conning reaffirms that the size of the potential market for secondary transactions is large.  Conning estimates an average face value Net Market Potential (NMP) of $122 billion for the next ten years.  Conning defined NMP as the total face value of policies that meet investor criteria and whose owners would consider selling their policies. That should put to rest concerns about supply.

Second, attracting investment capital remains a challenge according to Conning:  “Liquidity appears to be the largest hindrance to a strong return of capital to life settlements.”  The set of investors willing to commit capital for 8 to 10 years without an “effective tertiary market where already settled policies can be sold” will remain limited until this issue can be addressed.   A robust market for policies with shorter life expectancies attached would increase the supply of short duration policies and, in turn, offset liquidity concerns, thus improving the environment for growth of investment capital.  Conning concludes that “a shift toward nursing home care may help reduce the liquidity risk created by holding policies with longer life expectancies.”

Third, Conning reports a favorable view of the life settlement market’s entry into the long-term care sector:  “As elderly individuals, and their families, look for ways to pay for LTC, life settlements offer an additional source of LTC funding.  This creates a new opportunity for life settlement investors.”  In estimating the size of market, Conning presents several approaches for investors to consider.  In one analysis, Conning suggested that there may be more than $40 billion of death benefit that could be sold by policyowners seeking to finance their long-term care needs.  The opportunity for life settlement growth of smaller face policies of shorter duration is significant and will require changes in business plans and strategies of market participants, says Conning.  Relying on intermediaries to originate policies and the complexity of the life settlement transaction will be factors that could limit the profitability in small face transactions.  Time from submission to closing will have to be reduced and the transaction process streamlined.  Marketing and awareness will require innovation and creativity.

Professor Lauren Cohen, author of the Harvard Business School case study about life settlements, concludes there is every reason why the life settlement industry will thrive and grow, and at the same time there is every reason why the industry will need to make significant changes. The Conning Report confirms the view of Professor Cohen.  If there is a major theme in the report, it is that the future is now.  LISA is very pleased that Professor Cohen will also be at the Investor Conference and will present his case study on life settlements.

Sign up now for LISA’s 4th Annual Institutional Investor Conference on February 24, 2014, in New York City, where attendees will learn more about these opportunities and challenges for the life settlement market.  As of today, space is very limited, so register IMMEDIATELY!  .

Darwin M. Bayston, CFA
President and CEO
Life Insurance Settlement Association

Tertiary Portfolios Play an Important Role in the Life Settlement Market

The issues regarding significant new institutional capital entering the life settlement market in contrast to the sufficiency of original policy submissions is a topic of great interest.  For new investors, understanding the issues and nuances of valuing newly originated policies compared with tertiary policies and portfolios is important to understand.

19th-Annual-Fall-Conference-LogoOn the surface, it would appear since tertiary policies have been “previously owned,” the valuation process would be less complex with more information known, as they have been previously vetted, valued and “time observed”.  Aside from portfolios considered of adverse quality, there are a number of factors that impact the valuation and pricing of tertiary policies/portfolios.  Some factors relate to individual policies and some relate to the portfolio itself.

The difficulty, and sometimes inability, to re-underwrite insured lives and the impact on tertiary policy values is common discussion and debate.  Factors, given lesser discussion and debate, include the constraints related to servicing agreements, any limits or conditions on the bidding and sale process of the portfolio, and limits on confidential information related to insured lives.  For the seller, these and other limiting factors may seem trivial.  For the buyer, any constraints on the total disclosure of information or any conditions that limit a “no strings attached” transfer or ownership will impact the valuation of tertiary policies or portfolios.

The topic of tertiary policy and portfolio valuations will be discussed at LISA’s 19th Fall Conference in Orlando, October 9-11.  We encourage institutional investors to join us in the discussion and debate of this topic.

U.S. Commission on Long-Term Care Recognizes Life Settlements as a Private Sector Solution to Aid in Long-Term Care Crisis

The federal Commission on Long-Term Care, established by Congress to examine the long-term care crisis and propose potential solutions, released its final report this week.  The Report focuses considerable attention on financing long-term care services and includes a number of policy ideas, one impacting life settlements.

The report notes the role that life settlements could play in the private financing of long-term care.  One of the ideas presented recommends further examination and perhaps expansion of “the conversion of life insurance policies to long-term care benefit plans.”  The Life Insurance Settlement Association (LISA) supports this recommendation and notes that the general nature of this statement suggests implications for life settlements extending far beyond the current Medicaid legislation recently passed by Texas and being considered by many other States.

Life Settlements: The Next Ten Years of Unlimited Opportunity

U.S. Commission on Long-Term Care Recognizes Life Settlements as a Private Sector Solution to Aid in Long-Term Care Crisis

We have long been aware of the demographics of millions of seniors owning  hundreds of billions of dollars of life insurance, many who no longer need, can afford or want the policies.  The recent survey by ICR for The Lifeline Program found that (1) “55 percent of seniors have allowed their life insurance policies to lapse, viewing it as a liability instead of an asset (emphasis mine)”, (2) 80% of seniors over age 66 were not aware they could sell their policy, and (3) 40% are concerned about the ability to meet their long-term care needs.

These developments provide a significant and compelling mandate for the life settlement industry to coalesce around a massive effort to expand the awareness, information and knowledge of the benefits a life settlement option may provide for the millions of seniors who are in need of financial assistance for their long-term health care needs.

America’s seniors deserve to know about the options available regarding their life insurance policies and seniors’ financial advisors and counselors, the life insurance industry, and more importantly, the life settlement industry all have a responsibility and opportunity to help them.

The Life Insurance Settlement Association (LISA) is undertaking a massive program to create awareness for seniors, advisors, counselors and the financial industry about the importance and benefits of a life settlement.  Join us in that effort.  Attend our 19th Annual Fall Conference on October 9-11 in Orlando. Join the Association as a Member firm and get involved. Contact our office for more information.  (407) 894-3797.

The Life Insurance Settlement Association (LISA) Fall Conference – Why Should I (meaning you) Care?


The Life Insurance Settlement Association (LISA) is hosting its 19th Annual Fall Life Settlement and Compliance Conference in Orlando, FL from October 9-11, 2013.  It promises to be innovative, inspiring and important to the growth of the life settlement industry.

One question often asked from LISA members, industry participants and prospective attendees, “Why should I care about the conference?  It appears there is little on the program that affects me or that I am interested in.”  The answer is, “The entire industry has a stake in the millions of seniors and their advisors, counselors and caregivers having an awareness and understanding about a life settlement, as well as the other options available to them regarding life insurance policies they no longer need, want or can afford.”

Over the past 19 years, LISA, as represented in its conferences, has evolved into the most influential and important Association representing the life settlement industry.  It is human nature to focus on the immediate past and ask, “So, what have you done for me lately?”  The question should be, “What are you doing now and what are you doing to grow the industry?”  Then you can make the connection regarding the real question, “What are you doing that will cause my business to grow?”

In brief, we need to remind ourselves about what LISA has done over the past 19 years to influence the present.  It has been the dedicated efforts, financial support and motivation of LISA members, Board members, and staff who led a charge of focused activities, legislative influence, conference activities and policy positions (ethical behavior, STOLI, disclosure, transparency) that has created a consumer friendly secondary market where seniors may sell their unwanted, unneeded and unaffordable life insurance policies.  In sum, it has created an environment that allows your business to thrive and grow.

In simple terms, the potential of the life settlement market is comprised of: (1) millions of seniors who hold $1+ trillion face value of life insurance policies, (2) institutional investors who have $billions to invest in life settlements that offer attractive risk and return attributes, and (3) the many intermediary firms and individuals who provide an array of services in the transactional aspect of life settlements.  It is the mission of LISA’s conferences to present an agenda and speakers in an environment that fosters discussion, analysis and debate that impacts these three simple terms.  We acknowledge the past and the present, and focus on the issues that are important to future growth.  It is that simple.

We need your participation, we need your involvement and we need your support.  LISA will always strive to lead the way in educating and informing the senior community and its support network about the value of a life settlement option.  That in turn will lead to a consumer friendly and credible market where LISA members can grow their business in a credible and highly respected environment.

Come join us on Oct 9-11, 2013.  The industry needs your input, and LISA needs your participation.

Save now, register before our price increase this Wednesday, September 18, 2013.



“Everything You Knew About Marketing to Baby Boomers and Seniors May Be Wrong”

So says Jim Gilmartin, founder of Coming of Age  and one of America’s leading experts on marketing to this group.  That is a profound statement since Baby Boomers and seniors are the core constituency of the life settlement industry.  Just as profound is the fact that most seniors, their caregivers and advisors are not aware of the financial value or the options available regarding their life insurance policies – including the right to sell their Marketing Strategypolicy as a life settlement.

Jim is a featured speaker at LISA’s upcoming 19th Fall Conference to be held October 9-11 in Orlando.
He will provide his 20+ years of expertise and insights to a tactical approach to market to seniors.  Click here to watch one of his presentations.  Also a featured speaker will be Wm. Scott Page, a LISA member whose firm, The Lifeline Program has concentrated considerable resources to awareness and marketing to seniors and Baby Boomers.  Scott regularly appears on Stuart Varney’s FOX Business Network television show, “Varney & Company” as well as other national television programs. Click here to watch one of his videos.

A key mission of the LISA is to educate and provide awareness to seniors, their caregivers and advisors about the value their life insurance policy offers – including the option of selling the policy as a life settlement.  Awareness, education and marketing to seniors and baby boomers will be a featured part of our 19th Fall Life Settlement Conference.  Growing policy submissions for the industry is a central focus of the Association.  We hope many of you will join us in Orlando October 9-11.

Life Settlement Market – Lack of Policies, Lack of Capital or “Something Else”?


19th Annual Fall Life Settlement and Compliance Conference

The life settlement market, following a contraction that was fueled by the global economic crisis and some market-specific issues (such as life expectancy evaluations) is poised for a rebound.  A growing number of life settlement providers are again competing with one another for policies and the market as a whole is expanding its appetite for small-face policies.  In addition, a number of institutional investors are either poking around in, or have put a small toe in the waters of the life settlement market.

But this comeback has been slow.  Perhaps slower than some have hoped for or expected.

Is the reason for the slow resurgence of the life settlement market a lack of policies or a lack of capital?  Or is it something else?  Let’s go with the “something else.”

The potential size of the life settlement market, in terms of face amount of life policies purchased by investors, is large.  At least three independent analyses have concluded that the market for life insurance policies available to become the subject of a life settlement ranges from $100-$160 billion in face amount of life insurance.

  1. Bernstein Research (2006)  – $160 billion
  2. Conning Research (2012) – $136 billion Ave Net 2012-2021
  3. Bergstrom-Hart (2012) – $102 billion

My own analysis, based on 2011 data available on life insurance owned by seniors age 65 or older, supports these figures.  I have concluded that the potential market for life settlements is approximately $144 billion in available death benefits, with more than $66 billion, or almost 46 percent, owned by seniors age 75 or older.

So, the issue is not a lack of policies available for a life settlement.  Millions of seniors who are in need of retirement income, or are facing unanticipated long-term care costs, hold tens of billions of dollars of life insurance policies that could be converted through a life settlement into cash to meet those important needs.

Two years ago, the consensus was that the life settlement market suffered from a lack of capital.  The aftermath of the 2008 financial meltdown, negative press, life expectancy extensions and lawsuits among investors and insurers had given pause to new capital entering the market.

Conning Research has written reports about the life settlement market since 1999, annually since 2006.  In their 2012 Report, Conning did express that the fundamental appeal of life settlements remains for both consumers and investors, but that the challenge for the industry remains attracting capital to buy new policies.  They further suggested that the life settlement market may remain a smaller niche marketplace than originally thought.

Very recently, I have spoken to two well-known institutional investors that have been considering committing a total of more than $1 billion of investment funds to the life settlement space.  Independently, these investors have expressed hesitation about such investments based primarily on the inability of the life settlement providers they have met with to confidently express their plans and capabilities to accumulate a significant portfolio of quality policies in a reasonable period of time.

Professor Lauren Cohen, Harvard Business School, has authored a Case Study about the life settlement market that will be available in the near future.  The case will be taught to the students in Professor Cohen’s MBA Investment Strategies class in October, as well as next year at the renowned CFA Investment Management Workshop.  The case study will bring significant positive attention and credibility among institutional investors.

The combination of the potential of a large market of policies and institutional investor acceptance of life settlements as a credible competitive investment alternative suggests the issue is neither a lack of policies nor a lack of capital.

Then what is this “something else”?  Awareness and education!

The life settlement market and its member organization, the Life Insurance Settlement Association, have simply not mastered the art of marketing, informing, educating, and selling the rights and benefits a life settlement option offers to the public – to the millions of senior life insurance policyholders and their adult children, as well as financial advisors and counselors (financial planners, CPAs, elder care attorneys and insurance agents), and the media.  It is that simple.

A small number of LISA member firms, for example the Lifeline Program, have devoted significant time and resources to provide greater awareness and understanding of the benefits of a life settlement option to the senior population, their advisors, and the press.  Coventry, for years, operated the Coventry Center for Education, providing education (and CE credits) to thousands of insurance producers and financial advisors, before gifting the Center to LISA where we have been updating and expanding the course offerings.

Individually, these companies and others are achieving recognition and success.  However, expanding the market significantly begs the participation and commitment of the Life Insurance Settlement Association and the industry at large.  We need to be innovative, present and persistent.

In 2010, the Insurance Studies Institute (ISI) conducted an analysis of consumer decision-making behavior affecting the purchase and ownership of life insurance.  Seniors over age 65 were surveyed as well as personal interviews conducted.  Among the results:

  • 40% have lapsed or terminated a policy
  • 60% expressed concern their savings and net worth would not sustain them during retirement
  • 50% are not aware they may sell their policy, those who do are skeptical due to insurance industry negative messaging and negative press
  • 90% who lapsed a policy would have considered a life settlement had they been aware of the possibility

Another astonishing finding:  49% of financial advisors lack knowledge about a life settlement, therefore do not recommend the option.

Clearly, the issue is one of awareness and education, or lack thereof.  The life settlement market is capable of creating its own resurgence and significantly growing itself.

The speed and height of the recovery and growth will depend on a commitment by the market leaders, the Life Insurance Settlement Association and individuals to a well-defined and dedicated awareness and education program of marketing and selling to seniors!

Here is one thing that LISA is doing for its members at the upcoming Annual Meeting.  Mr. Jim Gilmartin, founder of Coming of Age and noted expert with 20+ years of experience marketing to seniors and baby boomers will be a featured speaker at LISA’s 19th Fall Conference October 10 in Orlando. Jim will discuss approaches and tactics that work and provide recommendations we can do NOW.  In addition, Scott Page, founder of the Lifeline Program will share his firm’s experience in awareness and marketing to seniors.  Scott appears regularly on the Fox Business News program, Varney and Company.

Join us at the 19th Fall Conference in Orlando, October 9-11 at the Peabody Orlando.  Call us (407) 894-3797 to register, or visit the conference website.