In the last couple years, US life settlement funds have made significant inroads into the UK. Last year, the UK’s securities regulator, the Financial Services Authority (FSA), began approving life settlement funds—opening life settlements to UK investors.

In the US, life settlements expanded rapidly in the early 2000s from less than $1 billion in 1999 to about $12 billion (face value) in 2008. Life settlements then contracted between 2008 and 2010 to about $7 billion. Although estimates from before the financial crisis estimated that life settlements would increase to between $90 and 140 billion in face amount settled by 2016, it’s looking like those projections were far too ambitious.

Read this complete analysis of the impact at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).

For previous coverage of life settlements in Advisor’s Journal, see Life Settlements—Savior of Municipal Finance? (CC 11-97), Life Settlement Provider Accused of Falsifying Life Span Reports (CC 11-23).

For in-depth analysis of life settlements, see Advisor’s Main Library: A—Life Settlements—Introduction.

The Texas state securities board is the latest government agency to pile onto Life Partners Holdings, with Texas Securities Commissioner Benette L. Zivley suing the life settlement provider for failing to respond to subpoenas issued by the State Securities Board.

The life settlement provider is suspected of misleading investors who invested in life insurance policies and not individuals who sold their life insurance policies to Life Partners.

The lawsuit asks the Travis County state district court to force Life Partners to respond to the subpoenas, which would require the company to divulge records of its marketing and sale of investments in life settlements.

Read this complete analysis of the impact at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).

For previous coverage of the Life Partners Holdings mess in Advisor’s Journal, see Life Partners Holdings Hit with Class-Action Lawsuit (CC 11-36), Life Settlement Provider Accused of Falsifying Life Span Reports (CC 11-23), & Life Settlements Funds Performance Fees under Scrutiny (CC 10-116).

For in-depth analysis of life settlements, see Advisor’s Main Library: A—Life Settlements—Introduction.

Life settlements offer diversity because their returns are uncorrelated to the markets. But are they a viable financing vehicle for municipal finance? Rancho Mirage California City Councilman Scott Hines thinks so.

Under Hines’ plan, the city would issue bonds, with most of the issue proceeds being used to finance city projects. The remaining funds would be invested in life settlements with an aggregate face value equal to the face value of the bond issue. Payouts on the life settlements would then be used to pay back bond principal.

Instead of the typical municipal bond financing arrangement, where tax dollars are used to pay back both principal and interest on an issue, Hines’ plan would leave taxpayers with only a bill for interest payments.

Read this complete analysis of the impact at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).

For previous coverage of life settlements in Advisor’s Journal, see Life Settlement Provider Accused of Falsifying Life Span Reports (CC 11-23).

The implosion of the secondary market for life insurance during the recent financial crisis left a lot of trusts scrambling to dispose of large face value life insurance policies. Trusts that handed back policies in satisfaction of premium finance loans were then struck, along with their grantors, with massive tax bills for what is known as cancellation of indebtedness or cancellation of debt (COD) income.

The IRS recently released proposed regulations that address the income tax treatment of cancellation of debt income of trusts. Although this highly technical area of the law may not be of interest to lay audiences, it’s particularly important for producers selling high-value life insurance policies.

Read this complete analysis of the impact at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber)

For previous coverage of an interesting case involving a premium financed policy in Advisor’s Journal, see Lawsuit Seeks to Hold Insurer Responsible for Suspicious Death (CC 10-101).

For in-depth analysis of life settlements (which can be structured as a premium finance transaction), see Advisor’s Main Library: B—The Life Settlement Industry.

The New York Department of Insurance, Office of General Counsel, held on February 25, 2011 that insurance carriers cannot refuse to convert a term policy to a permanent policy on the ground that the policy will be sold on the secondary market. The primary issue in the case was whether the converted policy is a “new” policy that must satisfy anew the insurable interest requirement. Nevertheless, this ruling will not affect all term policies, since many term life insurance policies are not convertible. Read this complete analysis of the impact at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).

For in-depth analysis of life settlements, see Advisor’s Main Library: B–The Life Settlement Industry.

Life Partners Holdings, Inc. investors have filed a class-action lawsuit against the Waco Texas based life settlement provider, alleging that its directors and officers violated securities laws. The lawsuit comes a month after an announcement was made that the publically-traded company is the subject of an SEC investigation into the life expectancies the company uses to value the life insurance policies it sells to its customers. Life Partners is accused of misleading its customers—investors in life insurance policy—about the life expectancies of insureds on the policies it sells, with insureds outliving the life settlement company’s life expectancy estimates 90% of the time.  Read this complete analysis of the impact at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).

For previous coverage of life settlements in Advisor’s Journal, see Life Settlement Provider Accused of Falsifying Life Span Reports (CC 11-23), Life Settlements Funds Performance Fees under Scrutiny (CC 10-116) & Should the Basis of a Life Contract be Adjusted by Mortality Charges? Rev. Rul. 2009-13 Says Yes in Context of Life Settlements; Certain Amounts over Adjusted Basis Treated as Capital Gains (CC 09-19).

For in-depth analysis of life settlements, see Advisor’s Main Library: A—Life Settlements—Introduction.