Life settlement legislation is first and foremost supposed to protect seniors and those selling their policies. States establish life settlement legislation that does this through licensing, disclosure mandates and transparency requirements. In general the primary goal of most new state legislation is to ensure that seniors have all of the necessary facts to make the wisest financial decisions. In addition, new life settlement legislation prohibits fraud, STOLI's and other unsavory elements of the life settlement landscape.

It seems as though people don't like change and bring fear when presented with new ways of doing things. Life settlements in their modern form are relatively new. However, they have been around long enough to garner a reputation as a consumer friendly transaction and one that has a legitimate place in the marketplace.

In my last blog post, I gave a little bit of background information on the role and importance of life expectancy certificates in the life settlement transaction and industry. Over the past year, the life expectancy certificate has come to the forefront of the life settlement industry. Last fall a very well known and respected life expectancy provider held a major conference call with their customers. Meaning life settlement brokers and life settlement providers.

A life settlement seems pretty straightforward to the outsider looking in. Someone has a life insurance policy they want to sell and a financial institution wants to buy it. A price is agreed upon, the transaction is completed and the sale is made. Easy enough, right?

Life settlement taxation hadn't been covered by the IRS because the industry is so new. Even though the life settlement industry has been around since the late 1990's, the IRS didn't give clear direction on how the proceeds from a life settlement should be taxed. There were some generally accepted practices among tax professionals that seemed to be the de facto rule, but the Internal Revenue Service was conspicuously silent. That has changed. The recent ruling still has some scratching their heads.

With just 5 states left that do not have laws pertaining to life settlements or viatical settlements, the number of unregulated states is dwindling. Although, California, New Mexico, Minnesota, Michigan, Illinois, Massachusetts, Delaware and New York regulate just viatical settlements, many of these states have their eyes on legislating the broader life settlement market. California and New York have broad, sweeping bills in the works aimed at the life settlement industry. They are being watched closely due to their large life settlement markets and consumer friendly regulatory environment.

The average life settlement is for a life insurance policy with a face value between $1.5 million to $2 million. However the average face amount of a life insurance policy is $320,000. So why the disconnect? Why is the average face value of a life insurance policy sold in a life settlement so much higher than the average face amount of an in force life insurance policy?

At Amrita Financial, we strive to lift the veil on the life settlement process. Here, we empower the seller during a life settlement in unprecedented ways:

1. Every bid, over three rounds of bidding, is shown to the seller.
2. No preferential treatment is given to any of the bidders, as the seller selects the winning bid.
3. We share a portion, up to 50%, of the commission, paid by the policy buyer, with the seller.
4. Last but not least, we offer life settlement appraisal tools, so that the seller knows what to expect going into the life settlement process.