A life settlement insurance program is provided including an insured
having a life insurance policy and a predetermined life expectancy.
A contracting entity is provided for contracting for the assignment
of the insured's life insurance policy benefits to a designated
beneficiary in exchange for payment to the insured. In the present
invention the contracting entity is a non-profit entity. The designated
beneficiary may be the non-profit contracting entity, or a service
provider, under a contract to provide services to the insured.
What is claimed is:
1. In a life settlement insurance program including an insured
have an insured's life insurance policy and a pre-determined life
expectancy, a contracting entity for contracting for the assignment
of the insured's life insurance policy benefits to a designated
beneficiary in exchange for a payment to the insured, wherein the
contracting entity is a non-profit entity.
2. The program as recited in claim 1 further including a funding
source for advancing funds to the contracting entity sufficient
to make life settlement payments to the insured, wherein the funding
source has a substantial interest in maximizing settlement payments
to the insured.
3. The program as recited in claim 2 wherein the contracting entity
is an entity recognized as a non-profit entity under applicable
4. The program as recited in claim 1 wherein the non-profit status
of the contracting entity mitigates contracting entity distributions,
and enhances funds available for life settlement payment to the
5. The program as recited in claim 2 wherein the non-profit status
of the contracting entity mitigates contracting entity distributions,
and enhances funds available for financial return to the funding
6. The program as recited in claim 1 wherein assignment of the
life insurance policy proceeds to the non-profit contracting entity
is effective to generate tax deductions for the insured.
7. The program as recited in claim 2 wherein the provision of funds
by the funding source to the non-profit contracting entity is effective
to generate tax deductions for the funding source.
8. The program as recited in claim 1 wherein the designated beneficiary
is the non profit contracting entity.
9. The program as recited in claim 1 wherein the designated beneficiary
is a health care provider that provides health services to the insured.
CROSS-REFERENCE TO RELATED APPLICATIONS
 (Not Applicable)
STATEMENT RE: FEDERALLY SPONSORED RESEARCH/DEVELOPMENT
 (Not Applicable)
BACKGROUND OF THE INVENTION
 The present invention is directed to a method of administrating
a life settlement insurance program. More specifically, the invention
is directed to a methodology for enhancing payments to insureds
in exchange for assignment of life insurance policies, during the
life of the insured.
 Traditional life insurance policies result in a payment
upon the death of the insured. During his or her life the insured
may designate one or more beneficiaries to receive the proceeds
of the insurance policy upon death of the insured.
 While such conventional insurance policies are useful, and
may be effective ways of accumulating and transferring wealth to
beneficiaries, such transfer cannot take place until death occurs.
In some cases the insured, or the beneficiaries, may develop an
immediate need for funds to support requirements that could be satisfied
or mitigated by immediate access to insurance proceeds. For example,
an insured may become ill and need funds to pay for long term health
care to allow him to live his remaining days in comfort and dignity.
In such cases an insured might prefer immediate access to policy
proceeds for his own use, rather than transfer those proceeds to
others after his death. Similarly, an insured may desire to transfer
proceeds from the insurance policy to beneficiaries for their use
prior to his death, e.g., to help the beneficiaries to purchase
a home or start a business. In such cases the present value of the
insurance proceeds may be more useful than the future value of those
 Certain types of insurance products allow an insured to
obtain a cash value of the policy, as determined by the insurance
carrier. In other cases an insured may take loans against an insurance
policy. However, the cash value and loan basis for such insurance
policies is frequently quite limited.
 More recently certain insurance providers have begun to
offer life settlement insurance programs. "Life settlements"
is a term applied to payments made to the insured, during the life
of the insured, in exchange for assignment of the insurance policy
proceeds upon the death of the insured. Such policies have been
utilized by persons with AIDS or other terminal illnesses, who desire
to access insurance proceeds to assist in their immediate medical
 The payments made under life settlement policies are frequently
limited, commonly in the range of fifty percent of the policy death
benefit. Moreover, insurers frequently limit the availability of
life settlement policies to only those individuals whose life expectancy
is three years or less. Specific life settlement proceeds may be
determined by a medical evaluation of the condition of the insured
and other relevant factors. From the insurance carrier standpoint,
profitability of life settlement policies is enhanced by mitigating
the payment to the insured, and reducing risk by limiting the availability
of the policy to those whose life expectancy is short term, e.g.,
three years or less. Insurance carriers are also acutely aware that
medical advances have been effective to significantly extend the
life of individuals having terminal conditions. While those advances
are certainly welcome by affected individuals, the resulting increase
in life expectancy may make those individuals ineligible to receive
life settlements under conventional insurance carrier criteria intended
to enhance short term profitability and mitigate risk to the carrier.
 Accordingly, there is a need to develop a restructured business
model for offering life settlement policies to insureds. In particular,
there is a need to enhance payouts available to insureds, and to
make payouts available to individuals having longer life expectancies.
The present invention is directed to providing these and other benefits
in connection with life settlement policies for insureds.
BRIEF SUMMARY OF THE INVENTION
 A life settlement insurance program is provided including
an insured having a life insurance policy and a predetermined life
expectancy. A contracting entity is provided for contracting for
the assignment of the insured's life insurance policy benefits to
a designated beneficiary in exchange for payment to the insured.
In the present invention the contracting entity is a non-profit
entity under applicable tax codes. The designated beneficiary may
be the non-profit contracting entity, or a service provider, under
a contract to provide services to the insured. A funding source
is provided for advancing funds to the contracting entity sufficient
to make life settlement payments to the insured. The funding source
may be an organization such as AARP or The American Cancer Society,
which may have a significant interest in maximizing settlement payments
to the insured.
 Depending on the jurisdiction and current tax provisions
within the jurisdiction, the non-profit status of the contracting
entity will be effective to generate tax deductions for the insured
and/or the funding source.
 The non-profit status of the contracting entity removes
profit motivation from the contracting entity thereby enhancing
funds available for life settlement payment to the insured, or for
return on investment to the funding source.
 Alternatively, the non-profit status of the contracting
entity may be useful to enhance the availability of the life settlement
payments to insureds having a longer life expectancy, e.g. 5-7 years.
 The non-profit contracting entity is positioned to negotiate
lower rates for long term health care services, for the benefit
of the insured. The long term health care provider and funding source
will therefore each have self interests in facilitating referrals
of insureds to the non-profit contracting entity. Periodic profits
generated by the non-profit contracting entity may be contributed
to charitable organizations, thereby further enhancing the referral
base for the program.
BRIEF DESCRIPTION OF THE DRAWINGS
 These as well as other features of the present invention
will become more apparent upon reference to the drawings wherein:
 FIG. 1 is a block diagram illustrating an exemplary embodiment
of the present invention.
DETAILED DESCRIPTION OF THE INVENTION
 The present invention is described in relation to the presently
preferred implementation, as set forth below. However, it is to
be understood that the described implementation is exemplary, and
is not intended to be the only implementation of the present invention.
As will be recognized by those skilled in the field, system level
implementation of the plan may be modified by rearrangement or redistribution
of component features or elements of the invention. Moreover, the
individual component elements may be modified by substitution of
equivalent components intended to provide the same, or equivalent
results. Accordingly, the described implementation is not intended
to be limiting of the broader aspects of the invention.
 Principal components of a contemporary life settlement program
include the insured's life insurance policy, an evaluation of the
insured's life expectancy, a contracting entity to negotiate and
execute an agreement with the insured, an entity for marketing life
settlement policies and funding sources for advancing funds sufficient
to make settlement payments to the insured. In conventional business
models the contracting, marketing and funding entities may be the
insurance carrier. The insurance carrier is motivated to provide
a significant rate of return on such funds, preferably in as short
a term as practical. The profit incentive in relation to each of
those activities mitigates the settlement payout available to insureds.
Moreover, insofar as competition is typically limited to competing
insurance carriers, there is little incentive to significantly depart
from high profit business models.
 In accordance with the present invention the contracting
entity is preferably implemented as a non-profit entity, whose principal
purpose is to enhance settlement payouts for the benefit of insureds.
This significantly mitigates profit and expense associated with
the business model, thereby enhancing settlement proceeds available
to insureds. For example, commissions normally associated with issuance
of policies are mitigated and the more charitable nature of the
life settlement program is useful to attract referral or funding
sources that might otherwise be commissioned, or require higher
rates of return on investments.
 Organizations such as teacher's unions, retirement associations
and the like may recognize that the present invention offers significant
advantages to their members in the form of enhanced life settlement
payments and enhanced options for quality medical care. As a result,
those organizations may be motivated to support the program by investing
funds into the program, even if the rate of return might be somewhat
less than would otherwise be available for such investments. Similarly,
referrals of insureds from nursing homes, retirement organizations
and other persons may be enhanced by a recognition that such referrals
work to the significant benefit of their members or patients, whose
welfare is in their own interest. As such, certain synergistic benefits
may arise from the utilization and support of the proposed life
settlement program, which benefit not only the insured, but those
service and funding providers who facilitate or contribute to operation
of the program.
 For example, because the present invention enhances payouts
to insureds, an insured may be able to secure additional health
care services, or secure the same services for a longer period of
time. This not only benefits the insured, but also benefits health
care providers with whom the insured may contract for services.
Membership associations, such as the American Association of Retired
Persons (AARP) or the American Cancer Society, which are dedicated
to advancing the interests of their members, may also identify significant
self interests in referring members, or investing funds in the operation
of the program.
 Another advantageous feature of the invention concerns the
charitable distribution of any incidental profits derived by the
non-profit contracting entity. Such incidental profits may periodically
arise as a result of differences between working capital secured
from funding sources and life settlement payouts. While the general
intention of the invention is to maximize distribution of settlement
proceeds without profit motive, it is expected that the non-profit
entity may periodically generate surplus funds, where incoming capital
exceeds outgoing payouts. In such cases it is anticipated that the
non-profit entity may contribute such funds to worthy causes, such
as the American Cancer Society or the like. Again, the support from
the non-profit entity provides further incentive for beneficiary
organizations to invest operating funds in the life settlement program,
and to refer insureds to the program. This further synergism enhances
the vitality of the program as well as the availability of additional
benefits to insureds and organizations of which they are members.
 Though not essential to the business model of the present
invention, it is anticipated that other benefits, including tax
advantages, may derive from the present invention. For example,
funding sources may identify tax advantages associated with contributing
operating funds to the non-profit entity. As a result, the net rate
of return to funding sources may be as good or better than the rate
of return available from other similar investments. Insureds may
similarly realize tax benefits by assignment of insurance policies
to the non-profit entity, effectively enhancing the net value of
participation in the program to the insured.
 Insofar as tax advantages are dependent upon the particular
circumstances of the insureds, the current status of applicable
provisions of the tax codes and other features, the availability
of such advantages is not certain. However, it is anticipated that
such additional tax benefits may be a further advantageous feature
of the invention under appropriate circumstances.
 Another feature of the invention concerns the utilization
of reinsurance as a means to provide further security to funding
sources. Reinsurance may be obtained to generate funds to compensate
funding sources in the event that the insured survives beyond a
predicted life expectancy. In such case reinsurance will provide
payments for distribution to funding sources to enhance the security
of their investment in the life settlement program. While the cost
of such reinsurance my mitigate the payouts available to insureds,
or the rate of returns available to funding sources, it is not anticipated
to significantly reduce the above-mentioned beneficial aspects of
the present invention. Moreover, the security derived from such
reinsurance may enhance the attractiveness of the invention, decreasing
the rate of return necessary to attract funding sources.
 It is also anticipated that funding sources for the present
invention may include London Interbank Offered Rate(LIBOR)based
loans. LIBOR loan rates are typically quoted each day by financial
publications, and by major banks. LIBOR based loans are commonly
computed on a 30-day rate, comparable to the rate that most creditworthy
international banks dealing in dollars charge each other for large
loans. In some cases LIBOR based loans include a premium. However,
such loans may nonetheless be less expensive than borrowing at prime
 Yet another feature of the present invention is directed
to life settlement payout options including long term care services.
As such, the insured may elect to receive his or her payout partially
or wholly in the form of long term care services for the insured.
As presently anticipated the non-profit contracting entity could
negotiate favorable long term care rates with nursing homes or other
service providers. The life settlement payment to the insured could
therefore be wholly or partially in the form of long term care services,
for the remaining life of the insured, or for a specified term.
To the extent that the life settlement payment exceeds the cost
of such long term care services, the insured could receive the remaining
life settlement payment in the form of a cash payment. In view of
the potential for substantial referrals of insureds to long term
service providers, the non-profit contracting entity could negotiate
favorable rates from long term service providers, for the benefit
of the insured. In one implementation of the present invention the
non-profit contracting entity could itself operate the long term
care provider services.
 A flow chart illustrating the principal aspects of the present
invention is set forth in accompanying FIG. 1. Set forth at FIG.
1 is a exemplary life settlement program 10 in accordance with the
present invention. As illustrated therein the insured 11 contracts
with the non-profit contracting entity 13 for assignment of the
insured's life insurance policy to a designated beneficiary, such
as the non-profit contracting entity 13 or service provider 17,
in exchange for a settlement payment and/or long term care services.
As noted above, the insured may also benefit by tax advantages associated
with assigning the insurance policy to the non-profit contracting
 Funding source 15 invests funds in the non-profit contracting
entity 13 sufficient to support settlement payments to the insured
11. In return, the non-profit contracting entity 13 provides the
funding source 15 with the return on its investment. As noted above,
the funding source may also realize certain tax benefits associated
with investing funds in the non-profit contracting entity 13.
 The non-profit contracting entity 13 may also contract with
service provider 17 for long term care services for the benefit
of the insured. Such long term care services may be offered by the
service provider 17 at bulk rates favorable to the insured 11. The
service provider 17 may also be motivated to provide referrals of
insureds to the non-profit contracting entity 13. Funding source
15 may similarly be motivated to generate referrals, e.g. of its
members, to the non-profit contracting entity 13.
 Insurance(reinsurance) provider 19 may contract with the
non-profit contracting entity 13 to generate a payment to non-profit
contracting entity 13 upon conclusion of the predicted life expectancy
of the insured. Such payments may then be provided to funding source
15, to insure that funding source 15 receives anticipated return
on investment even if the insured lives beyond his predicted life
 As it will be apparent to those skilled in the field, the
life settlement program 10 provides certain synergistic benefits
that are not commonly associated with conventional life settlement
programs. Moreover, the benefits associated with the present invention
may be realized not withstanding the redistribution of the component
features or elements of the invention. As such, illustrated embodiment
is intended to be exemplary and not limiting in relation to the
broader aspects of the invention.