Settlement Questions Likely to Come up in Life Insurance Lead Generation

Agents working on life insurance lead generation may do well to educate themselves about regulatory and financial realities involving the settlement market.

Under life insurance settlements, investors purchase policies from older people and continue paying the premiums until they die - in theory collecting a substantial profit at that point.

The practice can give older consumers an additional financial option to meet medical needs or other expenses, but has also come under fire in many states over ethical issues and other concerns.

One recent example of concern about such practices comes from California, where Governor Arnold Schwarzenegger recently signed legislation that bars stranger-originated life insurance policies while taking other steps to regulate settlements.

Still, life settlements have found a measure of new interest among Wall Street investors, although a recent report by Bloomberg notes that the credit crunch has reduced overall investments in the industry, giving buyers more of an advantage over sellers. According to the report, the value of policies that changed hands in 2008 was $11.8 billion, compared to $12.2 billion in 2007.

Given the controversy and large amounts of money that characterize this niche of the industry, it's generally advisable for agents involved in life insurance lead generation to keep up on such trends.