I read with interest Alain Thériault’s April 23 article “Viatical Settlements Stage Comeback to Insurers’ Chagrin”. In focusing on the insurance companies’ objections to life settlements, which possess the same economic profile as the insurers’ own annuity products, Mr. Thériault overlooked entirely the benefits seniors gain from being able to sell their policies to maintain their financial independence. This issue is of particular importance given the current broad concern over the inadequacy of pension funds and retirement savings.
A life settlements market provides seniors who no longer want or need their insurance with a choice beyond surrendering or lapsing for little or no value. Allowing seniors to capture economic value for this financial asset, after years of paying premiums, is only fair and equitable. Where an insurance policy is one of a senior’s largest assets, the ability to realize fair value from it could have a profound impact on his or her financial stability.
Selling a life insurance policy in Quebec is legal. This is clear from the excerpt from the Civil Code included in Mr. Thériault’s article. However, the quote that precedes it states that the practice is illegal. Further, the Autorité des marchés financiers (AMF) has no policies that prohibit the assignment (i.e., sale) of a life insurance policy, as long as it is done with the consent of the insured.
The decision to sell a policy is not necessarily for everyone; in fact, it is as personal as the decision to buy one. Clients need trusted advisors, like insurance agents, who will protect their best interests and present all available options to them. In turn, advisors should be able to operate in this manner without fear of reprisal from parties whose motives are in conflict with those best interests.
John Norman, CFA
Spartan Fund Management Inc.
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