Non recourse Life Settlement
Your Sept. 9 column was about why people shouldn’t buy a life insurance policy with a nonrecourse loan in order to sell it later to a life settlement company. I’m considering doing this. I understand from your column that although insurance companies might not like this arrangement, it is legal. You devoted a paragraph to the fact that the middlemen “all get big commissions” and wrote that I’d be “giving up permanent access to my medical records.” I understand the paperwork would include a copy of my insurance physical and current medical history, and my doctors’ names, but no one can get further information from these practitioners without my authorization. Why do you seem so dead-set against it? P.L., via e-mail
The middlemen’s commissions matter because every dollar they get is a dollar less for you when you sell your policy. And you should know that people recommending this deal often tend to minimize its drawbacks because they stand to make a lot of money if you agree.
The fact that insurers dislike the deals is also relevant to you. Insurers are contesting claims from policies bought with nonrecourse loans. As a result, some life settlement firms will no longer buy them. That reduces the market value of the policy you intend to sell.
As for the privacy issue: Of course, no one can get further information from your doctors unless you sign an authorization. That’s why you have to sign one. You must give the buyer of your policy permanent access to your medical records.
Source: Newsday
