The American Council of Life Insurers (ACLI) says there is no economic justification for a policyowner to do a life settlement. How do you refute this statement?
The ACLI is the main lobbying organization for their industry whose member companies reap the benefit when 90% ($909 billion) of universal life policies lapse. This position of no economic value in a life settlement was drawn from a 2005 Deloitte and Univ. of Connecticut study underwritten by the Hartford and other insurance companies. A rebuttal to this study on both economic and actuarial grounds was published later that year by Hal Singer and Eric Stallard. A copy is on the LSF web site. There is strong economic justification for a policyowner entering into a life settlement to either conservatively invest the proceeds or use them for another purpose. Take this example using the following assumptions: 1. Male age 75 [LE=9.86 yrs] has a $1,000,000 universal life policy [an interest rate based account, plus ever increasing term insurance], 2. $150,000 accumulated cash value would be paid to the policyowner if the policy is surrendered to the issuing insurance company, 3. Policyowner r
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