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Our guest columnists this month are Gary Brecka and Tom Virkler, JD, CLU.
Gary Brecka is the president and managing principal of Life Asset Group (LAG), located in Miami Beach, FL. LAG deals exclusively in the life settlement market, primarily in a brokerage capacity. Previously, he was the founder of a successful broker-dealership that is still an NASD member. he is a licensed life, health and variable annuity agent, which has helped him support his company as a life settlement leader. Gary can be reached at gary. brecka @lifeasset. com.
Tom Virkler is chief marketing officer for The Milner Group, located in Lawrenceville, GA. Milner is a full-service life insurance and annuity brokerage house. Previously Tom had served as director of marketing for First Colony Life, Lynchburg, VA, and Liberty Life, Greenville, SC. he can be reached at
tom@milnergroup. com.
J. Timothy Lynch, JD, CLU, ChFC
Abraham Lincoln said, "We cannot escape history." But the fact that we are products of our past does not mean we are its prisoners. In fact, understanding the past can enable us to deal effectively with the future. The history of life settlements is no exception.
An active marketplace for the sale and purchase of in-force life insurance policies had its beginning approximately 14 years ago. Funding sources interested in utilizing the death benefits as a source of investment return began soliciting the purchase of policies, mostly from the terminally ill, who could no longer afford the premium payments that were required to keep the policy in force.
These early viatical settlements, defined now in many states as transactions involving a terminally ill insured, often involved AIDS patients in extremely reduced economic circumstances. Frequently, offers were from noninstitutional funders. Competitive bids were uncommon in this underdeveloped marketplace. Commission irregularities were common and there was little or no confidentiality regarding the identity of the insureds whose policies were sold.
The unacceptable conditions and environment of the formative life settlement market have, understandably, left a bad impression in the minds of many within the life insurance planning industry. However, this dappled history of viatical sales should not predispose a planner to avoid a thorough examination and understanding of the current, rapidly expanding market for life insurance contracts. Today's life settlement...