LE: The estimate of how long a person is expected to live, known as life expectancy, is crucial in life settlements.
Legal Competency: This is a medical opinion stating that the insured or policy owner is of sound mind.
License (Provider): A state-issued designation that allows a company to purchase life and viatical settlements legally. Not all states require this license, so check state regulations accordingly.
Life Insurance: An insurance policy meant to provide financial protection upon the death of the insured. The death benefit is paid to the named beneficiary by the insurance company.
LISA (Life Insurance Settlement Association): The primary trade association in the life settlement industry, actively involved in regulatory and legislative matters across the U.S. and Canada.
Life Settlement: A transaction where the owner of a life insurance policy receives a lump sum cash payment to transfer both ownership and beneficiary rights.
Life Settlement Provider: An individual or company that purchases or facilitates the purchase of life insurance policy rights. State licenses are required in specific states for this role.
Life-Threatening Illness: An illness such as cancer, HIV/AIDS, or advanced heart disease, which can cause early death.
Living Benefit (Accelerated Benefit): Death benefits paid out while the insured is still alive under strict insurance carrier guidelines.
Medical Records: Documentation from doctors and medical facilities detailing the insured’s medical history.
MIB (Medical Information Bureau): An agency that reduces insurance fraud by functioning like a credit bureau for insurance companies.
NAIC (National Association of Insurance Commissioners): This organization consists of insurance regulators from every state, the District of Columbia, and U.S. territories, developing uniform policies where appropriate.
NCOIL (National Conference of Insurance Legislators): An organization of state legislators focusing on insurance legislation and ensuring its development and regulation at state levels.
Non-Contestable Policy: A life insurance policy that is beyond the contestability period, ensuring the policy cannot be contested by the insurer.
Notary Seal: Authentication provided by a notary public verifying the legality of written signatures and dates.
Owner (Policy Owner): The individual or entity that pays the premiums and holds the right to change the beneficiary or reassign ownership. Importantly, the owner of the policy is not necessarily the insured.
Premium Mode: The frequency at which premium payments are made, which can be monthly, quarterly, or annually.
Premiums: Periodic payments required to keep a life insurance policy active and in force.
Ratings: Evaluations published by companies such as Standard & Poor’s, Moody’s, Fitch, or A.M. Best, showing the insurance company’s ability to meet financial obligations. “A-” or better is often preferred by investors.
Rescission Period: The period within which a seller can reverse a life settlement transaction. In many regulated states, this period is 15 days and begins after the escrow agent has disbursed funds.
SGLI (Serviceman’s/Servicewoman’s Group Life Insurance): A group life insurance policy specifically for military personnel.
Split-Dollar Policy: A life insurance arrangement where two parties share the policy. One party names the beneficiary of the death benefits, and the other gets the cash value. Both share the premium payments responsibility.
State Regulations: Rulings made by state governments regarding life settlements.
STOLI (Stranger-Owned Life Insurance): An insurance policy issued for the benefit of someone with no insurable interest—essentially a financial transaction rather than genuine life protection.
Suicide Period: A period where a life insurance policy does not pay out if the insured’s death is by suicide. Upon suicide during this period, premiums are returned to date.
Term Policy: A life insurance policy with coverage for a set number of years, providing no value if the insured outlives the term.
Tracking: Monitoring the life status of the insured after a life insurance policy is sold, ensuring the policy remains valid.
Underwriting: The method of gathering and verifying information to analyze a life insurance policy, determine life expectancy, and assess the policy’s value.
VGLI (Veteran’s Group Life Insurance): Group life insurance provided to veterans.
Verification of Coverage (VOC): A statement from an insurance company that details the policy’s current status, including values, payments, and ownership.
Viatical Settlement: This involves a lump sum payment to the policy owner for life insurance rights when the insured has a terminal illness or a life expectancy of 24 months or less.
Viaticum: Derived from Latin, meaning provisions for a journey. Today, it refers to selling a life insurance policy in the secondary market, usually when the insured is terminally ill.
Viator: The seller of a life insurance policy, typically referring to an insured with 24 months or less to live.
Understanding these terms is crucial for navigating the life settlement industry. On our site, we offer comprehensive services related to life insurance policies. We help you unlock the value of your life insurance through informed decision-making. Contact us to learn more about how we can assist you in achieving your financial goals.
