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The term “senior settlement” is generally synonymous with the terms life settlement and viatical settlement. However, there may be some distinctions, as detailed below. A senior settlement is generally considered to be a type of viatical settlement in which the person covered by the life insurance policy proposed for sale is considered to be a “senior citizen.” In other words, if the insured person covered by a life insurance policy sold in the secondary market is age 65 or older, the policy owner and the insured would be said to be involved in a senior settlement. The use of this term became popular in early 2000 when the viatical settlement industry began to transition from the purchase of life insurance policies covering the lives of people suffering from terminal, catastrophic, chronic or life-threatening illnesses to the purchase of policies covering the lives of older individuals with “limited and ascertainable” life expectancies, regardless of the severity of their medical condition. Prior to this transition, many life settlements involved insured persons who were younger than 65 and whose health had been severely compromised. Today, the vast majority of all life settlements involve insureds who are in their mid-to-late 70s or older. The typical senior settlement or senior life settlement involves a policy which, on average, has a larger death benefit than the traditional viatical settlement. As mentioned above, insureds are usually over the age of 65, and while they may have any number of medical impairments, it is possible for insureds in their late 70s to early 80s to qualify simply due to their advanced age. In this respect, senior settlements differ from traditional viatical settlements in that the determination of life expectancy relies more heavily upon the insured’s age and the related actuarial implications, than upon the insureds health. In contrast, the typical viatical settlement relies more heavily on the insured’s medical condition and less on the insured’s age. It is possible for a senior settlement to have all the characteristics of a viatical settlement, and there is currently no distinction made in any regulations with regard to the age of the insured. Therefore, from a purely regulatory perspective, senior settlements are, in those states that regulate viatical and life settlements, governed by the same basic rules that control viatical settlement transactions. However, there are certain states in which the definitions applicable to viatical settlements and life settlements deem a viatical settlement to be a transaction in which the insured is suffering from a terminal, catastrophic, chronic or life-threatening illness or condition, whereas a life settlement is any other transaction involving a sale of a life insurance policy to a life settlement provider in the secondary market. For this reason, the terms senior settlement and life settlement are not technically synonymous and may vary from state to state. Recent legislation, as well as the ongoing modification of the model acts pertaining to the life settlement business, has caused the use of the term “senior settlement” to decline in favor of the more generic “life settlement” or “viatical settlement.” Still, some life and viatical settlement companies may issue marketing literature and other forms of communication which use the term “senior settlements” to describe their businesses. Regardless of the term used, it is important to remember that the use of age alone to delineate the boundary between viatical settlements and senior settlements is purely a marketing-based decision and cannot be used for making a determination as to how a particular life settlement transaction may be regulated. There are states which regulate only viatical settlements, states which regulate both life settlements and viatical settlements and still other states which do not yet regulate the secondary market for life insurance. Generally speaking, the life settlement industry today deals predominantly with life insurance policies covering the lives of persons over the age of 65. For this reason, referring to a life settlement as a “senior settlement” continues to be a relatively accurate means of describing the majority of life settlement transactions. Terms Defined: For definitions of the terms listed below, as well as other terms related to senior settlements or life settlements, please refer to our glossary page. senior life settlement financing senior settlement (or senior settlements) senior life settlement senior life settlements senior life insurance settlement |
