Opulen Capital Life Settlement: Standard Purchase Agreement: Does the Market Need It?

News out last week that the Institutional Life Markets Association (ILMA) has plans to develop a standard purchase agreement for tertiary sales has excited the life settlements market. With hopes of streamlining agreements so that the focus can once again rest on the transactions, ILMA is attempting to take the guesswork out of life settlements agreements.

What is also on the table – plans to come up with a standardized purchase document for the originating life settlement transactions by the end of 2009.

Why has it taken so long? The answer: it hasn’t. ILMA has distributed a life settlement transaction disclosure statement on its site and to its members and has championed transparency, but the lack of any industry standard has been apparent to all in the market. ILMA’s push to standardize puts the industry one step closer to more market soundness and stronger fiduciary oversight.

What does standardization do? One need only look to the insurance industry in general to understand how standardized forms can improve communication with clients, third parties, and help all in the market understand the basics of the transaction process. The same holds true for the life settlements industry. With a recent survey of seniors showing that only 45 percent were not aware of the life settlements option, the industry needs to come to terms with its inability to educate on a standardized platform.

With a standardized approach, brokers and life settlement providers can ensure more transparency in the transaction process. That translates to more confidence on the part of policy holders wanting to take part in the life settlement process.

That’s not to say today’s current life settlement agreement process is flawed. To the contrary, existing purchase agreements by and large are well written contracts that protect the interests of all parties in the life settlement process. Yet where one broker or life settlements solution provider may offer a particular service or option as standard, another may not. It becomes too easy for policy holders shopping a new market to become unnecessarily confused or enter into a deal that is not what was expected.

It can also lead the way to more state regulation of the life settlement market. With more states passing legislation that allows the state insurance commissions to regulate the life settlements market, legislators and insurance commissioners will be looking to standardization as a way to tie the life settlements market into state regulatory oversight, as well as the potential for the life settlements industry to be considered for coverage under state guaranty funds.

Standard purchase agreements could tie all these areas together under the state insurance oversight, though these potential events remain to be seen. But standardization is a great first step in strengthening the life settlements market and bringing more regulatory oversight, and thus more client confidence, to the growing market.

Located in La Jolla, California, Opulen Capital is a specialized financial services firm focusing on products and services tailored for senior citizens.  Opulen Capitalis one of the leading firms offering Life Settlementopportunities for high net worth clientele.  We leverage unrivaled experience and exclusive relationships in the life settlement marketplace to structure, obtain, and sell life insurance products to maximize cash profits for our valued clients.  Opulen Capital’s mission is to continue to provide the best solutions for our clients through the highest level of integrity and service.  For more information, visit our website at http://www.OpulenCapital.comor call Opulen at 877-OPULEN 1.