[News] H.R. 5958 Bipartisan Senior Health Planning Account Act

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H.R.5958: Bipartisan Senior Health Planning Account Act

What would the passing of H.R. 5958 mean for Life Settlements?

This Act would, if passed into Law, allow Life Settlement funds to be put into a tax-free Account and used for healthcare expenses. It would encourage the sale of policies before they lapse which 9 out of 10 policies do today.

How can I get involved?

Getting involved is easy. Contact the representatives: Sponsor Rep. Bryan D. Higgins (D-NY-26) and Co-Sponsor Rep W. Gregory Steube (R -FL-17) are listed in the Resources section below should you want to contact either or both. Their sites allow easy tracking of the Act as it makes its way through the law-making process.

How does this change Life Settlements from the current state of affairs in 2020?

As it stands today, the only policy sale that is tax-free is the Viatical Settlement which requires medical certification of probable death within 24 or fewer months. A feature of some life insurance policies is the Accelerated Death Benefit, which is also tax-free but requires a lifespan estimate of 6 or 12 months depending on the carrier. This is a loan from the carrier collateralized by the death benefit, and premiums are still payable. These terminally ill options were created by the passage of HIPAA, the Health Insurance Portability and Accountability Act of 1996, Public Law 104-191.

Note: There is an “Exception for business-related policies” that may nullify the tax-exemption for such policies.

Resources/Appendix

[Announcement] Registered Trademark for American Life Settlements

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Announcement: American Life Settlements® Registered Trademark

We are proud to announce that our Life Settlement Brokerage was awarded Registered Trademark #5930168 on December 10, 2019.

The U.S. Patent and Trademark Office determined that our offerings were sufficiently unique to be categorized as “Financial services, namely, insurance policy brokerage, settlement and loan services.” July 10, 2000, was our service mark’s first use and its first use in commerce.Many exclusive and enforceable rights were conferred to our independent, family-owned business as a result of this Registered Trademark.

Why we moved from selling new life insurance to brokering the sale of old ones.

Our life insurance agency of 1987 added Life Settlements to its menu of services in 1998 after senior insurance clients and referrals asked us to sell one or more of their policies. One of these Insureds was a close friend of many years before business and health problems bankrupted him and his wife. His Life Settlement proceeds prevented their home’s imminent foreclosure and helped rebuild their savings. As a retired Marine Colonel from the Korean Conflict, he celebrated this event by taking me the Marine Corps Birthday Party at the Roudebush VA Medical Center. This was a life-changing emotional experience for me. I returned home with the realization that delivering needed cash to the living was more important and motivational to me than writing up new life policies and delivering death claims.

American Life Settlements was founded, and our first Website was launched with the encouragement of the Colonel and his wife. We phased out the sale of insurance products to focus exclusively on Life and Viatical Settlements. Since then we have helped people from 32 to 93 with lifespans of more than twenty-three years to less than five. Our site features six programs including the Retained Benefit Life Settlement for those who want some cash now and to leave some benefit later. We also assist a variety of licensed professionals in adding Life Settlements to their practice.

Continued growth is forecast.

The Life Settlement Industry looks ahead to solid growth thanks to increasing numbers of people age 65 and older and greater interest by investors in this asset class because it is not correlated with financial markets, commodities, or politics. We are bullish on the Life Settlement Industry’s continued ability to broker policies for much more than cash surrender values, as well as Convertible Term policies.

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Morris Heins, President and Founder

[Part 3] How to overcome 20 Life Settlement Hurdles: The Insurance Company

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In part 3 of the series, we describe how life insurance companies (carriers) may contribute to the difficulties in getting a timely Life Settlement.

Issue #18: Most carriers delay creating life insurance premium illustrations.

Life Settlements could be 30% faster if carriers would just do their jobs promptly.To issue binding Life Settlement quotes, Life Settlement Providers must know the level annual cost of premiums to age 100. Carriers know that such an illustration is an essential part of a Life Settlement transaction. An illustration can be done in 20 minutes, but carriers usually take three or more weeks. Life Settlement Brokers secure these illustrations with cooperative carriers. When carriers are obstructive, Policy Owners must get involved.

Issue #19: Some carriers insist on working only with the Policy Owner

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[Part 2] How to Overcome 20 Life Settlement hurdles: The Insured

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How to Overcome 20 Life Settlement hurdles

Part 2 is focused on personal issues involving the Insured and/or the Policy Owner that are common hurdles that must be overcome when getting a life settlement. Of these, the most important is the health of the Insured. Other topics include legal proceedings such as bankruptcy, divorce, and incompetence.

#Issue 13: The Insured’s health has not changed since policy issuance

The most important personal Life Settlement question is: Would the Insured probably get the same health rating on a new life insurance policy? Life Settlement Providers typically prefer cases where the Insured’s rating would be worse or even uninsurable. Health that is essentially the same as when the policy was issued makes a Life Settlement far more difficult, though Convertible Term policies sometimes make the difference.

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[Part 1] How to overcome 20 Life Settlement Hurdles: Policy Issues

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In this three-part series, we identify conditions that may impact your Life Settlement.

Part 1: In part 1 we cover 12 issues with the life insurance policy itself. These issues include the Term Conversion deadline, Grace Period, Lapsation, and types of life insurance.

Part Two: Discusses 5 typical issues involving the Insured and/or the Policy Owner

Part Three: Reviews 3 common concerns with the carrier (life insurance company).

Issue #1: The Term Conversion deadline

Life Settlement Providers prefer buying Convertible Term life insurance policies more than all other types of life insurance combined. Providers need to submit conversion paperwork before the policy’s contractual deadline.

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