WP Stevenson & Companies

Senior Settlements have their roots in the Viatical Settlement industry of the early 1990’s.

Similar but certainly very different, Senior Settlements differ from Viatical Settlements in that a Viatical Settlement is an “investment” that one purchases based on the negative mortality experience of a Life Insurance policy insured/owner.

For example, a person with advanced AIDS. Infact, the purchase of policies owned by AIDS patients represent a significant part of the Viatical business. Investors were attracted, and in many cases convinced, by the belief that AIDS was a certain death sentence and that purchasing the policies of these affected people was about as certain of an investment as one could make. At their deaths, the policies payoffs would represent the investors (ROI) or return on investment. Unfortunately for the investors that purchased Viatical Settlements medical science has been able to prolong the lives of AIDS patients and therefore caused a great deal of disappointment in the projected returns.

Senior Settlements on the other hand view an individual’s ownership in their Life Insurance policy as ownership of a piece of deeded property. This property has a proper owner and as such a fair market value.

A Senior Settlement is an act of escrow, whereby the ownership is officially changed and documented for financial consideration.

Typically, the financial consideration to the seller is substantially greater than the stated cash value in the Life Insurance policy offered by the issuing company. The new owner (typically an investment group or bank) is now responsible for all future premium payments and as such is entitled to the death benefit as the beneficiary.

Naturally, a person with significant medical issues will likely find their policy to be of greater value than someone with no medical issues or mortality risk.

Until recently, the only option a policy owner had to “sell” his or her policy was to sell it back (cash it in) to the company that issued it originally. Imagine if you will for a moment how people would view Real Estate as an investment if they were required to sell the property back to the original builder at the time of sale for a predetermined fixed price that was set by the builder at the time the house was originally sold.

This would never fly in Real Estate but it has been essentially just that in the Life Insurance industry for many, many years.

Now you have a choice! If you are considering terminating your policy and you meet the criteria mentioned above, please call today to discuss how I can help you.