Coventry: Life Settlement NAIC Licensing Overview


Life Settlement
Policy	Term
Insured	Male, age 75
Face Amount	$11,000,000
Cash Value	$0
Coventry First purchased the policy for $2,750,000.
Click for More Case Details As part of his retirement package, a retiring CEO received an $11 million term policy. Since he had no desire to maintain the ongoing premiums, his advisor suggested having the policy valued by Coventry First to determine its market value. The client opted for a Coventry First life settlement which enabled him to reach his goal of establishing a $2,750,000 million trust for his grandchildren.


Life Settlement
Policy	Universal Life
Insured	Female, age 87
Face Amount	$6,500,000
Cash Value	$705,000
Coventry First purchased the policy for $2,500,000.
Click for More Case Details The client was still paying premiums in the tenth year of her seven-year vanishing premium policy. She was unhappy with the policy’s performance, but needed life insurance for estate planning purposes. Her attorney recommended having the policy appraised by Coventry First to determine its market value. The client chose a Coventry First life settlement which yielded more than three times the cash value of the policy. She used the proceeds to obtain more efficient coverage and meet her estate planning goals.


Life Settlement
Policy	Multiple Whole Life & Universal Life
Insured	Female, age 83
Face Amount	$12,000,000
Cash Value	$2,400,000
Coventry First purchased the policy for $4,300,000.
Click for More Case Details The client’s current policies were underperforming. Her advisor, understanding her need for insurance for estate purposes, suggested a Coventry First life settlement. The market value of her policies provided her with $1.9 million more than the cash value in her old policies. Using the proceeds from the life settlement, she was able to obtain a new $15 million guaranteed death benefit policy. Although the cost per thousand for the new insurance was higher, the premium outlay was 30% less after the income from the life settlement.


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In June 2004, the National Association of Insurance Commissioners (NAIC) overwhelmingly approved a new Model Regulation that governs settlements on the secondary market. The last provision of the Model Regulation to be resolved — that licensed life insurance agents have the authority to negotiate settlements on behalf of their clients — is now the basis for individual state regulatory and legislative action.

The Model Regulation together with the previously adopted NAIC Model Act establishes a substantial framework that enables consumers to access the value of their life insurance policies in the secondary market. The NAIC framework requires that all entities be licensed and that consumers receive two sets of disclosures. It also mandates that all transactions contain privacy protections and have clear funding requirements as well as a rescission period.

The Model Regulation marks the culmination of a five-year effort on the part of the regulatory community and the private sector to standardize regulation regarding secondary market transactions.

Coventry First applauds the pro-consumer qualities of the Model Act and notes that the industry must continue to be vigilant in assuring that consumers have access to information about the secondary market for life insurance through licensed life insurance professionals.

For more information on licensing requirements or regulatory action, please contact us at info@coventry.com or 877.836.8300.


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