Advanced Settlements, Inc., an industry leader in the growing life settlement marketplace, announced the results of a recent internal analysis of the company’s life settlement transactions showing that senior consumers received approximately $55 million beyond the cash surrender value for unwanted or unneeded life insurance policies.
« It is indeed a good day when we can quantify and announce statistics showing millions of dollars going into our economy that is improving the financial needs of our country’s elder citizens, » said Sean McNealy, co- president of Advanced Settlements, Inc. « Given the fact that some seniors may be thinking of letting policies lapse or accepting low cash surrender values, we believe it is important to communicate the value proposition of life settlements for seniors who are seeking a sensible exit strategy from unwanted policies, » McNealy added.
The internal analysis focused on the company’s life settlement transactions conducted between November 2004 and April 2005. The review indicated that senior clients who chose to do a life settlement received $55 million beyond the cash surrender value for the policies.
A life settlement is the sale of an unwanted or underperforming life insurance policy by seniors generally over the age of 70. ; Seniors are using life settlements for a variety of purposes, including the purchase of new financial investments, gifts to family or charity, the purchase of long term care insurance, the funding of replacement coverage with a better performing policy, and for lifestyle enhancement.
Prior to the emergence of the life settlement industry, seniors who were burdened with premiums for unwanted policies either let the policies lapse leaving large sums of money on the table, or were forced to accept the cash surrender value from the insurance carrier. The important thing to bear in mind, McNealy noted, is that most of these policies were purchased for a reason that no longer exists, so many seniors are grateful for an exit strategy that makes sense.
The company attributes the favorable statistics to the evolving marketplace dynamics characterized by a continuous infusion of capital sources entering the secondary market, coupled with Advanced Settlements’ broker model. Advanced Settlements’ broker model creates an auction-like environment where multiple providers or funders present competitive offers for the same policy. ; Similar to the manner in which retail competition helps establish fair prices for consumers, multiple funding sources operating on the secondary life insurance market create an environment where the economics of competitive pricing establish the policy’s true value.
McNealy added that when negotiating for the highest life settlement offer, brokers such as Advanced Settlements have the ability to leverage specialized knowledge of each funder’s unique pricing models in order to drive favourable offers. ; Pricing models include factors such as life expectancy, type of policy, amount of premiums, investment horizon of investors, cost of capital and securitization factors.
« For seniors or their professional advisors who may be contemplating a life settlement for an unwanted policy, the important thing to remember is not to accept just one offer and assume it represents the policy’s fair market value, » said McNealy. ; « Our entire economy is based on the free enterprise system where competition helps establish fair pricing. ; Why should it be any different for one of the most valuable assets a senior can own? »
About Advanced Settlements
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SOURCE Advanced Settlements, Inc.
Web Site: http://www.advancedsettlements
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