Cash Payments for Life Insurance Policies: A Growing but Troubling Trend

Strategic Insights -

People with terminal illnesses, like Aids patient Mr. S, are being offered attractive cash payments for their life insurance policies by a growing number of companies. However, these companies often have a history of delays, excuses, and in some cases, failing to provide the promised payments. This phenomenon is part of a growing trend in the UK, mirroring the multi-million dollar viatical settlement industry in America.

Key Takeaways:

  • Companies like Capital Lifeline are buying life insurance policies from terminally ill individuals, offering them a lump sum of money in exchange for the policy.
  • The transactions typically take 4-5 weeks to complete, but in some cases, payments are delayed or never materialize.
  • The lack of regulation in the UK has allowed companies to operate with little oversight, leading to instances of questionable business practices.
  • Insurance brokers like Robert Elkins are crucial in facilitating these transactions, but they often face challenges in getting companies to fulfill their promises.
  • The experience of Mr. S, who has been waiting for nearly three months for his payment, highlights the need for regulatory authorities to monitor this growing industry closely.
  • Companies like Capital Lifeline claim to have encountered funding shortages, but they continue to operate, leaving vulnerable individuals like Mr. S in a state of uncertainty.
  • The trend is expected to grow, with some insurance companies already offering accelerated payments as an option on some life policies.
  • Regulatory authorities need to establish guidelines to ensure that companies involved in viatical settlements operate ethically and transparently.

Statistics:

  • Capital Lifeline offered to buy Mr. S's policy for £38,012, which he accepted on October 24, 1994.
  • The transactions typically take 4-5 weeks to complete, but in some cases, payments are delayed or never materialized.
  • The market for viatical settlements is expected to grow significantly in the UK, mirroring the multi-million dollar industry in America.

Sources:

  • The article cites the experience of Mr. S, an Aids patient who was offered a settlement of £38,000 by Capital Lifeline.
  • The article also mentions Robert Elkins, an insurance broker who facilitated the transaction, and Ian Coley, a spokesman for Capital Lifeline.