You know what it is? That's right. It's time to talk money with your money nerd and financial coach. Now tighten those purse strings and open those ears. It's the Money Talk with Tiff podcast. Hey, everyone. I am so excited because I have Rob Haney on the line now. Rob is here to talk to us about something we've never talked about on the podcast. And honestly, I haven't seen many people talk about at all, really. And that's life settlement. So. Hey, Rob, how are
you? How are you, Tiffany? Good, thank you for having me. Yeah, pleasure. Because I'm like, I am not an expert on this, so I'm glad that I have an expert here. So let's just hop right in. What is a life settlement? Okay, so I'm going to try and make this really simple. So a life settlement is the sale of a life insurance policy from the owner, or in some cases the owner and the insured to a third party will call that person or that entity an investor
for money. Today, certainly less than the death benefit, but certainly more than nothing in the case of a lapse of a life insurance policy or the cash surrender value that the individual may have accumulated in the policy. So a perfect example would be someone who's in their mid-70s, has a million dollar life insurance policy that they no longer want anymore. The premiums became too expensive. The reasons they bought the life insurance
policy no longer exists. The situation would be they bought it in protection in case something happened to either one of the breadwinners, they were to die prematurely, the other could go on. Children's education, et cetera. That all dissipates when you're in your 70s, kids have grown up, you paid the house off, the mortgage, done, you may have already been retired, and the policy is just something you don't need anymore. So most people
unfortunately don't know their life settlement exists. So they either lapse the policy and no longer pay the premiums, or they cash the policy in for the cash. You're undervalued. What we do is that 75 year old comes to me and says, what's it worth? So in this case, we'll make the cash render value of $50,000. So if this individual were to surrender the policy, they would get $50,000 and the
policy would disappear. In my world, I go out as a representative of that individual and I go out to a marketplace full of lots of investors who invest in this asset class and put them in the uncomfortable position of being in a bidding war. So they're going to bid against each other based upon this individual's life expectancy and the future cost those premiums. And in this example, we'll just say we were successful and we found someone to give $250,000 to
the client. So instead of 50,000, the the client, the individual now is 250,000 to use for whatever they would like to use it for. Some cases they may buy an annuity, they may help to fund their long term care plan, or they may just want to go on a vacation or have a family reunion. But it's their money. They can deal with it as they please. So to wrap it up, a life insurance
policy is an asset, just like your home. It's real property. You can sell it, you can keep it, you can gift it, you can do whatever you want, just like you can with your home. But to your point, not many people do know what this is. I've been doing it for 31 years and I kid myself at the same time punch myself in the face when I say that our marketplace is insufficiently educated. We probably have an audience of less than 5% of the potential audience members that could participate in this.
And that's just because there's a lot of forces working against people selling their life insurance policies. For example. Life insurance companies don't want you to know you can do this because they don't want to pay. They don't want to pay a death claim when they don't have to. People are afraid of it. They don't know why they're afraid of it, but they're afraid of it. They think there's got to be something they're missing that sounds too
good to be true. And in essence it's not too good to be true for everybody. But it certainly is when it works in the case that we just talked about. So hopefully that gives you kind of an idea of what it is and maybe give you some thoughts for some future questions. Yeah, actually. So since you mentioned that, now I'm curious, are there any legal or ethical considerations, like if somebody was considering this option that they should be mindful
of? So that's a great question. So the answer to your question is there's we're regulated that make it. We'll start this way. We're regulated in 45 states in the District of Columbia. The other five that don't regulate it choose not to because it's a state by state decision. But we as an industry self regulate in the sense that we use the NAIC or End Quill model. Act
regulation as it relates to the sale of the policy. So there's nothing ethical or unethical about it because everybody that knows the transaction is happening signs off and acknowledges they know that they're transferring the ownership to a third party and that they're getting money for that transaction so no one can come back and say, hey, you pulled the wool over
my eyes. And most importantly, a life settlement only takes place when you're getting more money than you could otherwise get any other way. So if you have surrender in the earlier example of $50,000 and you're getting 250 and you say what's better for you, 99 out of 100 are probably going to say the 250. Right? One thing we do is so people who this doesn't sit well with, in other words, they've sold the policy and now they have the
money and for whatever reason they just can't sleep at night. It just doesn't sit well with them. We have a 15 day right of rescission on every one of these. They can unwind the transaction, give the money back and the policy goes back and forth. That has happened in my career three times and unfortunately all three was when the insured that was selling the policy or the family member inside that family was selling the policy passed away inside of that 15 day rate of rescission.
So that's when it happened. So that's. Unfortunately that does happen. But our marketplace has grown so that you can be a lot younger and a lot healthier and still sell your life insurance policy in our marketplace. Gotcha. Now there's many different flavors and styles of life insurance. So what does this work with? So does this work with term, does this work with hold? What does this work with? So you're so the answer is all the above
because you know you are changing, changing the ownership. As long as the investor understands how the policy is to be paid for going forward and they're comfortable with those premium allocations, they'll buy just about anything. But I will tell you that the majority of policies that are bought are universal life policies.
And then second are term policies that are inside the conversion period because in those days those policies a little bit later on will be converted to a universal life and if not a universal life, a whole life policy. Iuls Guls vuls also can be
sold. So it's one of those situations. And I just had this conversation yesterday on another podcast where we talked about what sells and what doesn't for people who don't know the best Thing that we recommend is that you send us the policy information, you fill out a state approved application and we'll find out exactly what you're working with. A lot of people unfortunately don't know
what it is they even own when it comes to life insurance. For that matter, there's a lot of life insurance agents that have no idea what they've actually sold their clients. So our job is to kind of clean it up. There's many times, Tiffany, that we get an answer and sometimes we make the life insurance policy more valuable to the seller and he or she doesn't sell the policy because they know it's worth
more later on if they were to sell it. So they hold onto it like any other asset and they figure the older they get, the more value it'll have in our marketplace. And quite frankly, that's not a bad idea. Gotcha. Now I have a question. So these questions keep popping up because this is
the first time I've talked about it, right? So if there's a buyer, right, do they still go through like making sure that they vet their health and things like this, or is it something that people that can't qualify for life insurance can go through this route and still get life insurance? I hope that question made sense. You're talking about if they go through this route and they don't qualify. Well, the only way you don't qualify for this
is two, twofold. One, you're, you have a life insurance policy, but you are too healthy, you've taken out too big of a loan, the premiums are too expensive, so the math doesn't work or you don't have a policy at all. If you are looking to buy life insurance, we're not the place to come, but we know a couple of places where you can go to look to purchase life insurance. So life insurance is kind of the opposite underwriting of a life
settlement. So when you try and buy life insurance, you work with your life insurance professional and you go out, you do, you know, medical examination and you give the insurance information, all the information that they're requesting, not more information than they're
requesting, just the information they're requesting. So you're not going to get into, when you talk about in a narrative of how healthy or unhealthy you are, you're just going to let the underwriting work for itself and you may apply multiple carriers. With our business, we want to know everything, okay? So we want to know all the stuff that's happened in your life, insignificant in your mind, may be Very significant in ours because we're looking at it as what
is your life expectancy really? We're not bundling you up into an age and a class and saying, oh, the average person who looks like that lives this long. We're looking at Rob Haney's life expectancy, Rob Haney's medical reports, Rob Haney's characteristics, Rob Haney's family history, and on that, those life expectancies come into these investors and it is those life expectancies and that information that gives them the idea of what a policy
is worth or not worth. Gotcha. Gotcha. Now, if somebody's listening to this and they're like, this sounds really interesting, what advice would you give them for weighing the option of doing a life settlement? What are some things that they should be aware of or should think about? What's the ideal person for
this? Okay, so we say that people should be anytime you're in your 60s, so I just turned 60, so you do my age or older and you have a life insurance policy that you definitely don't want anymore, you think you don't need it or you can't afford it. You should look to have your life insurance policy appraised by an organization like mine. So what does that mean? So you're going to collect. I'm going to collect medical records again, you're going to tell me all the doctors I should be going to. And
I'm going to collect. I'm going to collect them, not you. And I'm going to collect your insurance information and I'm going to show that to licensed providers in the state where you're domiciled to give them an indication of interest. They're not going to underwrite it fully. They're going to say, this looks like something we'd like to dig a little further. We're going to go ahead and buy life expectancy and a life expectancy
or life expectancy. We can go through this whole process and I can come back to you and say, I have good news. You're not going to qualify for a life settlement. And the reason is everyone has you as a life expectancy of
25 plus years, right? So that's good news for you as an individual, not good news to sell your life insurance policy, but at least, you know, or I can do that, go through that process and someone come back and say, I've got good news and this group is willing to offer you X. And you may think, wow, that's not a lot of money or that's way More than I thought. And at that point, there's a decision you made, what steps would go further. But like I said earlier, you're in
control. Nobody is telling you you have to sell. We're just trying to give you an idea of what it's worth. So when you think about assets that most people have, their home, their jewelry, their art, watches, whatever it is, you want to know what they're worth. You get an appraisal. And trust me, the people that appraise all the items I mentioned in those lists, there's a
cost associated with that. But when you're done, you'll know exactly what that watch is worth or that picture that you've had in your family for generations is worth, or what the home you live in is worth. So why not do the same thing with your life insurance policy? Because in many instances, this is either your second, third, or maybe even your largest financial asset that most people don't even know is a financial asset that they can sell. So that's what we try and teach
people. As you want to know what everything else is worth in your life, why not know what your life insurance is worth as well? Exactly. Exactly. Because you know when you put in your net worth, that life insurance, at least the cash value is an asset. Now, I have a question on the other side, because I'm also business person, I love talking business too. On the other side of the transactions. So let's say the buyer, what do they now do with this policy? Well, it depends on the buyer.
But we use as a general example, they don't just buy one policy. They buy hundreds if not thousands of life insurance policies and they hold them and they create some cases they're in funds, open end funds, closed end funds. They buy the policies and the traditional fund holds them to maturity. So they buy them, they pay the premiums going forward, and as the individuals pass away at some future date and time, they receive the full death benefit and they reinvest
more. I see others, there's others that buy the policies. And there's a more fluid market, which we call a tertiary market. And the buyers can buy and sell policies after they've been sold initially on the secondary market, much like any other asset that's out there today. So one of the things, our life expectancies that we were able to buy went from about 60 months at the turn of the century to close to 240 months today.
And you say to yourself, well, who would buy a life insurance policy that they know they're going to have to pay the premiums for 20 years or more. And the answer is pension funds, because their liquidity needs are so far off in the future, they like this asset. So to really make this make sense is the reason they buy this asset. This is an alternative asset as it's viewed by many. And they don't buy a lot of it because there's not a lot of it to buy yet. But it's
uncorrelated. So if the market, the stock markets, the financial markets across the globe were to go south, we'll say for a couple of weeks and there's huge corrections everywhere you look. The life insurance policies that you hold as an investor, has the death benefit decreased, premiums gotten more expensive? Nope. They're the same life expectancy of the insured. You bought change. So that's why they like it stable. Very interesting. This sounds very interesting. That's why it's, that's
why it's got, like I said, it's got. We're 31 years in the business and still so few people know that exists. So that's why I'm always very, very optimistic about the future. Because once people, individuals like yourself, very intelligent in the business world hear this for the first time, it doesn't take hours of convincing. It takes seconds to realize this is a valuable thing for everybody. The investor
is going to win if he or she knows what they're doing. The seller is going to win if they work with the right people or they work with anyone at all for that matter. Because if they don't, we know what's going to happen. They're going to surrender for the cash surrender value, which is really just return of their own money, a little portion of it, or let it lapse, which is the worst of all outcomes. So it's got legs. The financial markets are looking at it. So give
you an idea. There's two companies that run ads on TVs. These are groups that the providers I mentioned earlier in the conversation, one's called Coventry. They run ads all the time on the financial channels and the news channels. And as does Abacus. They do the same. Abacus is a public company right now, traded on, I believe the nasdaq. So. And they're going to
get bigger, but it's going to, it takes time. This isn't something that people are, you know, clamoring to find out about it, especially if they don't know about it. And if you think about it, the initial instincts of a person when they hear about it, and I'll use myself as an example, I thought it was the most ghoulish thing I ever heard of. I was like,
oh my God, this is horrible. But then as I was driving home literally for that initial conversation, it dawned on me that, wait a minute, we're giving people their money on an asset that they own and paid for early as opposed to waiting until they died. Like, if you own life insurance, you don't get the death benefit. Your heirs do. You have to die for them to get it. Well, now you're able to use the
money while you're alive. So we've had many, many examples where they've done some really incredibly fun things with their money because it's like found money. I talked a little bit about family reunions. We had one couple, this is in the 90s. They paid for every one of their family members. I'm talking like 30 some odd people to go to Disney World for a week, got them rooms, got them all together. The individual that had cancer was still able to do things and be himself. And he
died a year later. But he always had that memory and so will his family. He was able to do that because he sold his life insurance policy while he was still alive. We've had people gift their life insurance to philanthropic organizations. One down here, the Ballet in Miami, their names on it. They gifted that to the ballet center and they were able to, the last 10 years of life, go and enjoy the ballet, walk through the doors with their name above on a financial donation that they gave as
a result of giving a life insurance policy. So instead of. And it's a win win for everybody, they get the tax write off, they're still alive. And the 501C3 got to use the money tax free to finish off the ballet center. So it was a pretty amazing, amazing things. But again, thankfully for people like you who are willing to put people like me on your podcast, more people will learn about something that I bet you 99% of them never knew existed. Absolutely,
absolutely. And you know, I'm just thinking about, you know, on the policyholder side, what it can help with, you know, just practically like long term care expenses because it get real expensive, y'all, when it comes to long term care. Care and things of that nature where, you know, you don't want to be a burden on your family. But now you have this extra option that you probably
never thought of that you can now use. So I really like this for both sides, honestly, because I'm over here, like, how can I buy some policies for later on in life when I'm retiring and stuff, then I can start cashing them in, you know. But anywho, we covered a ton in this episode. Now, if people were interested in learning more about Life Settlements or about you, Rob, how could they find you? Well, my. I have a phone
number that never stops ringing. And what. I like it ringing. So it's nine. That's 954-599-4433. That is my cell phone. And like I said, day or night, reach out. If I don't get back to you, I will shortly. And my email address is Rock Settlements. S E T T L E M e n t s dot com and my website is www.lisettes.com. All right, perfect. And I will make sure I have all of that information in the show notes for our audience. So if you're doing something else, you couldn't write
it down. Don't worry, it's in the show notes. Thank you so much, Rob, for coming on the show today. This was very insightful, even for me. Well, that's, that's the goal. I mean, if you could just change one person's mind perspective, it was, it was, it was well worth it. But I can't thank you enough. All right, have a good one. Bye. Thank you for listening, joining, and being a part of the Money Talk with Tiff podcast
this week. You can check Tiff out every Thursday for a new Money Talk podcast, but if you just can't wait until next week, you can listen to previous podcast [email protected] or follow TIFF on all social media platforms at Money Talk. Until next time. Spend wise by spending less than you make A word to the money wise is always sufficient.