To the Members of the California State Senate:
I am returning Senate Bill 1543 without my signature.
This bill would enact the Life Settlement Consumer Protection Act of 2008. Specifically, this bill would create a regulatory framework for life settlements in California. Life settlements are complex financial transactions in which a life insurance policy owner possessing an unneeded or unwanted life insurance policy sells that policy to a third party for more than the cash value offered by the life insurance company. Life settlements have grown increasingly popular in recent years, especially with older Californians, raising questions of whether adequate regulations are in place to oversee the industry. While life settlement companies are already regulated by the California Department of Financial Institutions, proponents of this measure believe the Department of Insurance should play a greater role in regulating these companies as well.

Although I share the proponents’ goal to ensure that life settlement transactions are properly regulated, I cannot sign this measure at this time. The provisions of this bill were amended into it very late in the legislative session. While many of the provisions were agreed to by all the parties involved, some of the provisions are still subject to worthwhile debate. For instance, it is my desire to ensure that life settlement transactions contain proper notification and disclosure to consumers. I am also concerned that the final version of the bill may unfairly exclude some companies from participating in the legitimate life settlement market.

I am asking my staff to convene meetings this fall with all the stakeholders to review the provisions of this bill and consider what, if any, changes are needed to ensure that any regulatory framework put into statute appropriately protects seniors, provides consumers with adequate disclosure, and does not unfairly discriminate against legitimate companies trying to compete in the life settlement business. It is my belief that any outstanding issues can be resolved and we can quickly pass any necessary legislation in 2009. For these reasons I am returning this bill without my signature.

CA Senator Michael Machado. http://dist05.casen.govoffice.com/index.asp?Type=B_BASIC&SEC={71220C56-C6E4-4FD2-868F-8F47D1DC50F6} (posted October 1, 2008).

21st Services announced early this week that they will employ new mortality tables to more accurately reflect advances in data gathering, analysis and assessment of seniors’ lives. Following the introduction of a new mortality table, 21st Services will effectively lengthen their life expectancy determinations. Accurate Life Expectancies remain paramount to determining a policy’s fair market value; therefore an additional LE report is still mandatory on every case. Although this is a significant shift for the life settlements, the marketplace has experienced this before, and more often than not, it results in small impacts in outlying cases. However impactful this may be, nothing can undermine the value that life settlements bring to both the financial professional and their senior clients. GWG Advantage remains confident in the asset class and the medical actuarial expertise employed.

Do you have clients over age 65 who have ever surrendered a life insurance policy?

In a recently published study by Agent Media, researchers found that 56% of agents reporting had senior clients (65+) who had either surrendered or allowed a life insurance policy to lapse. Of that 56%, it was also noted that fewer than 35% were made aware of Life Settlement by their trusted Financial Advisor. 

Agent Media in Partnership with Life Insurance Settlement Association, Agent Media Market Research: 2008 Life Settlement Study, (2008).

In this episode we sat down with GWG Advantage CEO, Jon Sabes to discuss the nuances of Life Settlement.  Jon, with over twenty years of experience as a financial professional, offers poignant insight into the emerging market of Life Settlements.  (16.12 min)  To activate the control, click on the right-facing arrow; then again on the arrow to listen to the podcast.

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[audio:http://www.gwgadvantage.com/podcast/episode1.mp3]