Ethics
Past abuses have left some people with the impression that there is something unethical about life Settlements. Let’s discuss that.
Q. Are Life Settlements ethical?
A. Yes. Like anything else, the ethics of Life Settlements is determined by whether full, unbiased disclosure is made to the client and whether recommendations and decisions are made in the best interests of the client.
Q. At one time I recommended to my client that he buy life insurance. How can I now recommend that he sell his life insurance, and not be accused of duplicity?
A. Your client’s life situation and insurance needs change continually. And life insurance has certainly changed. Funds received through a life settlement can often provide the client with greater coverage, possibly paid up, more appropriate to his/her situation, in an up-to-date policy.
Q. My agency has a policy that prohibits me from dealing with Life Settlements. Why?
A. There are two primary reasons for this. First are misunderstandings of what this is and the benefits it provides. Life settlements have been mischaracterized as unregistered securities. This is not true when they are placed in the secondary commercial market. Second, the carriers have benefited in the past from being the only market where a policy-holder could “sell” his policy (through redemption of cash value). As usual, the life insurance market is developing faster than institutional change can accommodate.