As the US baby boomers generation ages, a concern is how to fund their LTC (Long-Term Care). Life settlements can provide an alternative source to funding of LTC.
As the government faces fiscal constraints in funding long-term care benefits. It appears that regulators are looking to improve the viability of the use of life settlements. Investors can provide a source of LTC funding through the purchase of cash value policies.
Recently, on 30th November 2018, a Bill (HR 7203), was introduced to the US House of Representatives jointly by Rep. Kenny Marchant (Republican) Texas and Rep. Brian Higgins (Democrat) New York at the behest of the Alliance for Senior Health Care Financing.
The Bill was immediately referred to the “House Ways and Means Committee” and appears to have bi-partisan support.
This Bill would allow Seniors to use the proceeds of the sale of their Life Policies to pay for healthcare costs and long-term care arrangements (including long term care insurance premiums). Allowing the sale amount to be rolled over into tax free accounts.
Any distributions from the accounts would not be taxed if used for permitted healthcare costs. Conversely, distributions for unauthorised purposes would be subject to income taxes and 20% excise tax.
Undistributed amounts in the accounts, including investment earnings would not be taxed during the Senior’s lifetime or his or her spouse’s lifetime.
This will be achieved by amending the Internal Revenue Code of 1986 and creating a new IRS Code Section 139H via a “Long Term Care Account Act”.
This kind of option has previously only been available to proceeds of Viatical Settlements (Terminally Ill insureds with short Life expectancy).
Extension of these arrangements to the much larger “Life Settlement” market (Retirees with unwanted / excess life insurance) is further evidence of the significant benefits that flow to the US economy from the Secondary Life Insurance market.
This continued legislative support and consequential additional market exposure clearly bodes well for the continued supply and prosperity of the market for Secondary Life insurance.
As always, we wish you well with your life settlement investment opportunities and if you want to learn more about investing in this asset class please contact us.
About Global Insurance Settlements Funds PLC (GISF)
Global Insurance Settlements Funds PLC (GISF) is incorporated in Ireland as an umbrella type investment company. The fund permits segregated liability between sub-funds. The first sub-fund launched, GIS General Fund (the Fund), is listed on the Irish Stock Exchange.
This structure is aimed at Sophisticated / Institutional investors and provides tax clarity by ensuring there is no tax leakage. It enables a number of different investment options to suit the specific needs of our investors.
The Fund’s core activity is to actively manage a large and diverse portfolio of life insurance policies (life settlements) issued by companies in the USA. Policies are sourced by licensed U.S. Provider companies and the Board of GISF select those that best meet the Fund’s policy purchase criteria.
Disclaimer: This information is intended for qualifying investors only and was correct at the time of preparation. It has been prepared to provide general information only and should not be considered as a “securities recommendation” or an “invitation to invest” in any jurisdiction. Potential investors should consider the relevance of this information to their particular circumstances. Before proceeding investors must obtain the prospectus and take their own legal and taxation advice. If you acquire or hold one of our products we will receive fees and other benefits as disclosed in the prospectus and relevant offering documents.
