The Life Settlement Institute Responds to ACLI Statement Urging Ban on Securitization of Life Settlements

The Life Settlement Institute (LSI), the leading organization representing secondary market providers for life insurance, responded today to a February 3rd ACLI News Release urging policymakers to ban securitization of life settlements.

The February 3rd ACLI policy statement urging policymakers to ban securitization of life settlements because such securitization "will exacerbate the STOLI [stranger-originated life insurance] problem" is akin to proposing a ban on baseball because some players may use steroids or a ban on football because some players suffer concussions. Securitization of life settlements is pro-consumer as a mode of funding life settlements. STOLI issues are logically addressed through insurable interest and STOLI laws. To that end, the Life Settlement Institute supports insurable interest laws and has vigorously supported legislation to prohibit STOLI, including supporting legislation and regulation requiring insurers to ask appropriate questions in their life insurance policy applications to ferret out potential STOLI.

Unfortunately, the numerous straw man arguments in the ACLI statement concerning life settlement securitization are not useful or relevant to STOLI abatement discourse. Rather, we urge ACLI to distinguish between the pro-consumer benefits of life settlements (and life settlement securitization) as opposed to illegal STOLI practices, as previously set forth by ACLI President Frank Keating: "'Sometimes, circumstances force consumers who purchased life insurance policies in good faith to consider life insurance settlements. We are not trying to shut down the option for consumers. Our legislative efforts are targeted at STOLI," Keating said.'" ACLI should withdraw this misguided statement.