#2 - Senior Life Settlement Anatomy 101
Investing implies that one puts money into equities, debt, real estate or some market-traded instrument with the hopes that it will appreciate in value over time.
A Senior Life Settlement should be differentiated in the mind of the buyer. The permanence and predictability of life insurance is the industry's sustainability. If there was a single instance of a US life carrier to fail to pay a claim, it would undermine a trillion dollar industry and the confidence we place in the "Promise to Pay." The US Legal Reserve System is the key to understanding the X Factor of why Senior Life Settlements are not an investment.
A Senior Life Settlement is a discounted purchase of a life insurance policy sold by a third party. The seller receives an amount greater than the insurance company will pay under a surrender arrangement. The buyer purchases the contractual right to receive the death benefit from a legal reserve life insurance company. It is an asset with an assigned value...The Face Amount of the Seller's Policy. Not an investment.
Through devastating world wars, financial recessions and depressions, sweeping epidemics, earthquakes and fires, inflation and deflation, the life insurance industry has protected people to a degree unmatched by any type of financial institution in the history of the world.
The financial reliability of the life insurance industry, even in times of financial panic, was demonstrated convincingly during the Great Depression of 1929-38 when some 9,000 banks suspended operations while all life insurance in force continued unaffected.
Reinsurance, acquisitions, and mergers protected virtually all policy owners in the affected companies against personal loss. Unlike most industries where size is a major measure of financial stability, life insurance's unique series of safeguards can make even the smallest company a tower of strength.
In 1949 Mr. Leroy A. Lincoln, then president of the world's biggest life insurance company, Metropolitan Life of New York, stated:
"You're as safe, as well protected and the cost is just as cheap if you buy from a small insurance company as from the largest."
Yours for Life
Another unique advantage of legal reserve life insurance is that if one company is purchased or merged into another, there is no change whatsoever in the policy benefits or premiums. Legal reserve life insurance companies have established a public responsibility to respect both the letter and the spirit of laws and regulation so the interest of their policyholders are always protected.
Policyholders' Protection Comes First
Today, as has been the case for many years, it is unlikely for the policy owner of legal reserve life insurance companies to lose their policy benefits. Through strict state insurance department regulations, the establishment of many state insurance guaranty associations and because of the insurance industry's history of financial stability and public responsibility to operate in a manner not detrimental to the welfare of the community, your policy is secured by industry safeguards.
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