It was announced on May 15, 2009 that the Treasury Department is prepared to inject up to $22 billion under the Troubled Asset Relief Program (TARP) to a number of U.S. life insurers, including Hartford, Prudential, Principal, Lincoln, Allstate, and Ameriprise.  This is troublesome for the economic efficiency argument outlined in my article, “The Next Revolution for Investment in Capital Markets:  Taking Away Beta-Risk with Life Settlement Portfolios.”  It would now appear that the idea Warren Buffet and the life insurance industry had of creating a Beta-risk free investment with life settlement policies is subject to just that amount of Beta-risk which $22 billion has been quantified to remedy.  If a life insurer goes bankrupt, by definition, the prospect of fully paying beneficiaries is called into question.  The “Buffet plan” for addressing Beta-risk has failed just as it was making a more noticeable presence in the capital market.  The undeniable and non-diversifiable power of Beta-risk remains.

This said the likelihood it is the life insurance side of things that has brought about the unusual circumstances of a solid and respectable industry sticking its hand out for government relief is minimal.  Provided a large enough sample of those taking life insurance policies exists, like the number of spins in roulette, a certain and predictable association results between pay-ins and pay-outs.  In the history of life insurance, those less able at actuarial forecasting or managing cash flow have always found relief within their own industry, with larger, better managed companies taking over the policies of those less able, thereby preserving the integrity of the death claim-death payment contract.  There is no reason to suspect this would not continue today.  Life insurance policies do not suddenly become unprofitable.  It is more likely the $22 billion of TARP has to do with the life insurance industry’s involvement in the insurability of mortgage and credit defaults than with its foundation of life insurance policies.  In that respect, the efficiency of life settlement investments outlined in my article remains valid, even if I must acknowledge the existence of some Beta-risk left owing to other-than-life-insurance involvement within the industry itself.

This piece will be added to:
Life Settlement Investment Study section

LifeSettlementInfo.com would like to announce that Chris Okeson, a Life Settlement Advisor with Busha-Okeson Insurance, is proudly offering life settlement services to seniors and professionals in Ohio and the surrounding areas.

Christopher K. Okeson is a life settlement advisor who specializes in helping seniors sell their inforce life insurance. Call today 216-766-6300. Learn more about Busha-Okeson Insurance

Chris’s profile and website are listed on Ohio Life Settlment

Got a call from an agent asking about Errors and Omission coverage for life settlement transactions.

Errors and Omission Insurance (E&O Coverage): E&O insurance is a type of insurance carried by most qualified financial organizations. Some E&O coverage providing by life settlement brokers or life settlement companies are setup on a case by case basis, others have a “blanket” type coverage. You will most likely have to complete some type of documentation to be included in the coverage. You should make sure that your broker or company carries E&O insurance. You can even ask to see their certificate.

If you have more questions, please call the Life Settlement Helpline at: 1-888-823-7764

Premium Financing is still a hot topic related to the Life Settlement Industry, we get a lot of emails and calls about specific types of premium finance and available programs. A popular question we get is in regards to how insurance carriers view premium financing, and is it risky?

Well we found a great resource that describes how carriers are working to protect themselves through the application process.

Here is the questions and answer:
Do Life Insurance Carriers agree with Premium Financing?

We are also ready to answer question, either call our toll free help line at 1-888-823-7764, or simply email us at questions@lifesettlementinfo.com

With the changes of on taxation of Life Settlement Investments, will Life Settlement become securities?

Although the SEC’s involvement in the life settlement market already comes into play for variable-life-insurance policies as well as the securitization of policies, a letter sent recently by SEC Chairman Mary L. Schapiro to Sen. Herbert Kohl, D-Wis., who is chairman of the Senate Special Committee on Aging, suggested that the commission will also look at the registration of life settlement providers and brokers. The SEC declined to comment further.

The Internal Revenue Service recently published guidance on taxing life settlements — both the lump sum that the seller receives and the income tax that the buyer pays upon receiving the insured’s death benefit. The move signals that the federal government is ready to act.

About new tax guidelines:
IRS Issues Two Groundbreaking Rules on Life Settlements

Read complete article:
Feds want to get their hands on life settlements, observers say