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Q4 - Vol. 2, No. 2, October 2005 Life Settlement News
Industry Is Experiencing Record-Breaking Growth
Membership in the Viatical & Life Settlement Association of America (VLSAA)nearly doubled within the past 18 months. VLSAA estimates that in 2004, life settlements paid policy owners approximately $1 billion in proceeds, $660 million of which was in excess of the cash surrender value.
From our perspective, we are seeing more wealth management firms, CPAs, certified financial planners, and estate planning attorneys embracing the produce due to its utility in the estate-planning process for high-net-worth senior clients.
Industry researchers cite several factors that are spurring the industry's rapid growth, including the following factors:
(1) longer life expectancies
which may cause seniors to outlive the usefulness
(2) the decline in interest
rates over the past few years that could result in lower
(3) the reduction in estate tax
burden, and the proposed elimination of the But at the end of the day, most industry experts agree that the life settlement industry is growing so rapidly simply because it is providing a valuable service to high net worth seniors. Within the past 11 months, life settlement transactions that we have handled resulted in $116 million beyond the cash surrender value. This represents a significant amount of money going into our economy in the form of new insurance and financial products, among other uses. We estimate that between 35 to 45 percent of the life settlement cases we transact involve some form of replacement coverage. Other seniors are using the proceeds for a whole host of reasons, including real estate investments, charitable giving and family lifestyle needs.
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