“Shares of life insurance settlement provider Life Partners Holdings Inc. (LPHI: News ) went down by over 13% at close of Wednesday’s trading, after an analyst research report called its fees egregious and non-sustainable, and put out a warning to potential investors.”
Citron advised investors to consider carefully as the company had “too many red flags”. The analyst termed the high-level fee of $500 thousands per transaction that was being charged by the company as “egregious” and not “sustainable”.

The report claimed that Life Partners’ gross commissions were 14.4% of the face value of policy settlements in its third quarter that ended on November 30, 2008. But, on an average, the fee is only about 6.0% of the face value or 30% of the gross sale price for such companies.

The report further claimed that investors of life settlements normally seek target of an Internal Rate of Return or IRR’s of 9%-13%, but Life Partners promised as high as a 16% IRR to its investors.

Citron infers, “If Life Partners is forced to cut margins even by half to approach industry norms, its net profit will sink by 63%.” The report concluded that Life Partners sustained their high-level fee income only by “concealment.”

There’s more.

Add in a onetime fee for 3rd party closing costs estimated at $2,200 for our example, and before you receive a dime – fees are already $16,630!

In addition, lenders charge a monthly service fee, called the service fee set-aside – usually $20-$35 monthly and a monthly interest charge of maybe .5% per month.  These can add on thousands to the final cost of the loan.

Most fees are deducted from the amount you borrow so they significantly reduce the cash you receive.

In fact – 63% of seniors who shopped for a reverse mortgage – decided against it because they knew they had other, better options.

The primary goal of the Life Settlement Network is to help seniors find the value in an asset they may not have known had any value.  Unwanted or unneeded life insurance can provide a terrific cash infusion and is a vastly superior option to a reverse mortgage in most cases.

I thought a quote by Doug Head, LISA’s Executive Director, summed up the current environment very well:

“In 2009 LISA will focus attention on life insurers’ anti-consumer market conduct that impairs policyowners’ access to life settlements and other secondary market transactions.”

Life Insurance companies would rather senior policyholders surrender policies or let them lapse than have the policyholder sell their policy for fair market value.  As a result, many life insurance agents do not recommend life settlements so as not to disrupt the source of their primary business – selling the life insurance in the first place.

If you or someone you love owns or is paying premiums on unwanted or unneeded life insurance, have them discuss the option of a life settlement with their financial advisor and visit our calculator for a free and instant life settlement quote.

We certainly hope LISA’s predictions are correct and that the government will take a more active role in eliminating confusion and representing the consumers’ best interests.

Under the law, any money you donate to charity from your IRA will count toward the annual withdrawals you’re required to take from these accounts after reaching age 70½.

If you itemize your deductions, you’ll also come out ahead. That’s because taxpayers whose adjusted gross incomes exceed certain thresholds lose some of their deductions and personal exemption amounts. By not adding $1,000 to your income, this gift might help you keep your income below these levels.

Those in a position to take advantage of the IRA Charitable rollover include those:

· who are already giving at their deduction limit

· whose income level causes the phase-out of their exemptions or itemized deductions

· for whom additional income will cause more of their Social Security income to be taxed

· who wish to remove up to $100,000 from their taxable estate

Take advantage of giving opportunities like the above or through donating the proceeds of a life insurance settlement.

In a special report by MSNBC (a joint venture between Microsoft and NBC) titled “Economy hitting the elderly especially hard”, the author suggests that the slumping economy is affecting retired people and the elderly more than any other demographic group.

Citing a study by the AARP, elderly Americans are filing for bankruptcy in record numbers.

The AARP also found:

• 45 percent say food prices have caused a hardship for their budgets
• 39 percent think at least some foods will have to be rationed within a year
• 47 percent are shopping for food less frequently
• 41 percent are eating less meat
• 18 percent have started eliminating some meals

This is astounding! Now is the time to review and ensure your financial fitness!

A specific example of a service affected by the combination of higher fuel prices and higher food prices is the “Meals on Wheels” program. Whether you are a recipient of meals from this service or an active senior delivering meals, you can see the impact higher food and gas prices have in increasing the cost to both provide and deliver meals.

What can we do about this, other critical programs and our own well-being?

Knowing your financial options and preparing for the future are two things that all of us can do to make our senior years more comfortable, enjoyable and secure.

• Research and buy Long-term Care Insurance. This can be a much better option than assuming a reverse mortgage or family will be able to support you later in life.

Click here for an article on long-term care insurance by the AARP.

• Are you paying too much for Life Insurance?

Check out these two websites rated as “Best Quick Life Insurance Quotes” and “Best For Personalized Life Insurance” by Kiplinger magazine.

• Familiar with a Life Insurance Settlement?

Get an instant and free Life Settlement Estimate and then decide if it makes sense to continue paying premiums on your policy. It is not uncommon to find a less expensive policy and fund the new policy and long-term care insurance by selling an existing policy!

To learn more about Senior Life Insurance Settlements, talk with your CPA, Attorney or go to http://www.thelifesettlementnetwork.com/.

Watch for (or subscribe to) this weekly blog/article series for a review of the latest news on finance issues facing seniors and for helpful websites and tips.

Questions and comments are welcome and encouraged.

As if seniors were not already aware, aging can be expensive. In the June 9th, 2008 edition of BusinessWeek, page 11 presents some interesting data on just how much more seniors are spending than the “young” (25 – 34 year olds).

On average:

• Seniors spend more than 4x what the young do on Health Insurance
• Seniors spend almost 3x on Housing Upkeep
• Seniors spend more than 4x on Prescriptions

While seniors spend much less than the young on items such as mortgages, rent and alcohol – the article also cites assisted-living facility costs have risen 25% since 2004, and the annual costs of nursing homes have reached almost $80,000 annually!

Consequently, it is absolutely critical that seniors are aware of all of their financial options including reverse mortgages, long-term care insurance and selling unwanted life insurance policies in senior life settlement transactions.

While “borrowing” against a home in a reverse mortgage has provided many seniors additional funds for necessities, donations or fun; a lesser known and often better financial option is the selling of unwanted life insurance. Eligible seniors can sell their policies for up to 4 times the cash surrender value or more.
Contact your attorney, certified financial planner or CPA, or go to http://www.thelifesettlementnetwork.com/ to find the latest information on senior life settlements. A free life settlement calculator and no-obligation policy submittal tool are also provided.

Know your financial options – and offset the rising costs of a comfortable life.