If not us, who?
Today, the benefits of life settlements are beyond question, they are a proven investment that helps seniors financially, relieves the cost of government social programs, and provides investors with a solid investment. So why are so many investment firms still sitting on the sidelines?
Perhaps they don’t see the long-term economic and social consequences of not acting now? Perhaps they’re coattail riders – getting in after others have done the upfront, heavy lifting? Perhaps they’re intimidated by the reach of the life insurance lobby? Or perhaps they allow a narrow financial perspective to obfuscate the value of true leadership?
This project requires the type of leadership that combines a good financial return on investment with a good socio-economic return on that investment, which, in turn, complements and sustains long-term growth. In Canada, life settlements are an opportunity to make a significant contribution to that growth.
Good enough, isn’t
Establishing a viable life settlement industry in Canada is not a toe-in-the-water issue or a wait-and-see project. We need a collective effort because a fragmented, everyone-for-themselves approach is ineffective and in the long run more costly. We need a sustained, consistent and collaborative endeavour.
Policy flow will be somewhere between inadequate and mediocre until we mount a persuasive campaign to change legislation and significantly increase public awareness.
It’s not about size. Any fifth-grader can do the math and project the billions in investment potential. It’s not about the merits of life settlements; that is self-evident. And it is not about letting someone else do it. If a collective few with a long-term view won’t do anything then who will?
Time and money
Time has been public enemy number one in the attempt to establish a life settlement industry in Canada. More than fifteen years ago the Ontario Government had the political interest and intent in establishing a life settlement industry. But it didn’t happen. Not for a lack of political will (legislation was passed) but because of insurance company lobbying and bureaucratic sclerosis. So if the financial investment sector doesn’t do something about it, it could be another fifteen years.
Each year that well-regulated investments funds are not investing in Canadian life settlements there will be lost opportunities:
- Another year of inadequate policy flow.
- Another year in which a hundred-million-dollar life settlement provider does not generate a $10 million ROI (at five hundred million, it would be in the $50 million range).
- Another year when tens-of-thousands of seniors do not receive hundreds of millions in life settlement proceeds.
- Another year of increased social costs as governments continue to pour billions into supporting the aging population, paid for in taxes from businesses and individuals.
- Another year in which new consumer spending, the largest component of GDP, does not get into the hands of seniors.
“Without commitment, there is only empty talk and wishful thinking.”
The goal is similar to that of LISA in the United States.
To first change legislation and regulations, and in parallel, educate consumers and advisors about life settlements as a viable alternative to allowing an insurance policy to lapse or be surrendered for less than its fair market value, and to advance the highest standards of practice and professional development and build the reputation of the life settlement industry and advocate for a competitive marketplace.
This is an economic, political and moral issue that needs to be addressed by all concerned. Essentially, a Canadian life settlement industry will create a secondary market that rectifies the denial of seniors’ right to a free market system. The current regulations basically act as a tax on seniors because the regulations remove or reduce the value of an asset they own and worse, instead of the taxed value going to support government social programs, it goes to the insurance companies. And it is billions of dollars every year.
LISAC is advocating for:
- Seniors rights
- Fair market value
- A well-regulated life settlement industry
- Reduction of long-term government costs (i.e., social programs, healthcare)
- Opposition to the self-interests of life insurance companies
LISAC’s national goals and strategies will be implemented province-by-province, starting in Ontario.
- Legislative change
- Public awareness and support
- Distribution channel awareness, efficacy and support
There is little doubt about the need and potential as well as the long-term investment value and the long-term socio-economic benefits. And there is no doubt about the need for leadership. We should not sit on the sidelines.