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Insurance Abstract
An auction-based system and method for a life insurance secondary
exchange. Through a phased process that includes an information
phase, a submission phase, an offer phase and a close phase, a life
insurance policy may be submitted and sold by a policy holder to
purchasing groups via a trusted advisor and broker. The policy information
is received at a central location. Purchasing groups/providers are
automatically notified when a policy is available for sale. If interested,
the purchasing groups/providers pull further details on the policies
they wish to review. The purchasing groups/providers then submit
offers on the policies. The policy holder then determines whether
an acceptable offer has been made, and sells the policy. If not,
the policy may be efficiently re-auctioned.
Insurance Claims
1. A computer-based auction method for a life insurance secondary
exchange, the method comprising the steps of: receiving life insurance
policy information for at least one life insurance policy available
for purchase, the information being received to at least one database
associated with the life insurance secondary exchange; receiving
submission of bidding requirements for the at least one life insurance
policy, wherein the bidding requirements include terms and conditions
for purchasing the policy, and wherein submission of the bidding
requirements are received to the at least one database associated
with the life insurance secondary exchange; storing the life insurance
policy information and bidding requirements; submitting at least
part of the insurance policy information to at least one purchasing
group, including: automatically notifying the at least one purchasing
group of the availability of the at least one insurance policy for
purchase; and making available insurance policy information related
to the at least one policy to the at least one purchasing group;
and wherein the insurance policy information includes a unique identification
code associated with the insurance policy; determining whether an
offer acceptable to the policy owner was received for the at least
one insurance policy; and if an acceptable offer was received, closing
the purchase of the at least one life insurance policy.
2. The method of claim 1, wherein the step of closing the purchase
of at least one life insurance policy includes the steps of: electronically
delivering the closing documents from the at least one purchasing
group to the policy owner.
3. The method of claim 1, wherein the step of automatically notifying
the at least one purchasing group of the availability of the at
least one insurance policy for purchase, includes the step of: sending
an electronic message to the at least one purchasing group.
4. The method of claim 1, further comprising: making available
historical information to life settlement brokers and purchasing
groups based on previous settlement transactions.
5. The method of claim 1, wherein the insurance policy information
includes medical records, general policy information on the insured,
and the life expectancy of the insured.
6. The method of claim 1, further comprising: after determining
that no acceptable offer was received for the at least one life
insurance policy, receiving submission of changed bidding requirements
for the at least one life insurance policy, wherein the changed
bidding requirements include different terms and conditions for
purchasing the policy, and wherein submission of the changed bidding
requirements is received to the at least one database associated
with the life insurance secondary exchange; submitting at least
part of the insurance policy information to at least one purchasing
group, including: automatically notifying the at least one purchasing
group of the availability of the at least one insurance policy for
purchase; and making available, to the at least one purchase group,
insurance policy information related to the at least one policy,
the information including changed bidding requirements; determining
whether an offer acceptable to the policy owner was received for
the at least one insurance policy; and if an acceptable offer was
received, closing the purchase of the at least one life insurance
policy.
7. The method of claim 1, wherein multiple insurance policies are
available for purchase in accordance with a single set of bidding
requirements.
8. The method of claim 1, further comprising the step of: prior
to the step of submitting at least part of the insurance policy
information to at least one purchasing group, determining whether
the policy is marketable.
9. The method of claim 1, further comprising the step of: determining
whether the at least one purchasing group is pre-qualified, including
by determining compliance with confidentiality requirements for
the life insurance policy information.
10. Computer-readable media containing programming that, when executed
on a computer processor, causes the processor to perform the steps
of: receiving life insurance policy information for at least one
life insurance policy available for purchase, the information being
received to at least one database associated with the life insurance
secondary exchange; receiving submission of bidding requirements
for the at least one life insurance policy, wherein the bidding
requirements include terms and conditions for purchasing the policy,
and wherein submission of the bidding requirements are received
to the at least one database associated with the life insurance
secondary exchange; storing the life insurance policy information
and bidding requirements; submitting at least part of the insurance
policy information to at least one purchasing group, including:
automatically notifying the at least one purchasing group of the
availability of the at least one insurance policy for purchase;
and making available insurance policy information related to the
at least one policy to the at least one purchasing group; and wherein
the insurance policy information includes a unique identification
code associated with the insurance policy; determining whether an
offer acceptable to the policy owner was received for the at least
one insurance policy; and if an acceptable offer was received, closing
the purchase of the at least one life insurance policy.
11. The computer program of claim 10, wherein the step of closing
the purchase of at least one life insurance policy includes the
steps of: electronically delivering the closing documents from the
at least one purchasing group to the policy owner.
12. The computer program of claim 10, wherein the step of automatically
notifying the at least one purchasing group of the availability
of the at least one insurance policy for purchase, includes the
step of: sending an electronic message to the at least one purchasing
group.
13. The method of claim 10, further comprising: making available
historical information to life settlement brokers and purchasing
groups based on previous settlement transactions.
14. The computer program of claim 10, wherein the insurance policy
information includes medical records, general policy information
on the insured, and the life expectancy of the insured.
15. The computer program of claim 10, further comprising: after
determining that no acceptable offer was received for the at least
one life insurance policy, receiving submission of changed bidding
requirements for the at least one life insurance policy, wherein
the changed bidding requirements include different terms and conditions
for purchasing the policy, and wherein submission of the changed
bidding requirements is received to the at least one database associated
with the life insurance secondary exchange; submitting at least
part of the insurance policy information to at least one purchasing
group, including: automatically notifying the at least one purchasing
group of the availability of the at least one insurance policy for
purchase; and making available, to the at least one purchase group,
insurance policy information related to the at least one policy,
the information including changed bidding requirements; determining
whether an offer acceptable to the policy owner was received for
the at least one insurance policy; and if an acceptable offer was
received, closing the purchase of the at least one life insurance
policy.
16. The computer program of claim 10, wherein multiple insurance
policies are available for purchase in accordance with a single
set of bidding requirements.
17. The computer program of claim 10, further comprising: prior
to the step of submitting at least part of the insurance policy
information to at least one purchasing group, determining whether
the policy is marketable.
18. The computer program of claim 10, further comprising: determining
whether the at least one purchasing group is pre-qualified, including
by determining compliance with confidentiality requirements for
the life insurance policy information.
19. An auction-based system for a life insurance secondary exchange,
the system comprising: a memory system that includes life insurance
policy information for at least one life insurance policy available
for purchase, the memory system further including bidding requirements
for the at least one life insurance policy, wherein the bidding
requirements include terms and conditions for purchasing the policy;
logic that submits at least part of the insurance policy information
to at least one purchasing group, including: logic that automatically
notifies the at least one purchasing group of the availability of
the at least one insurance policy for purchase; and logic that makes
available insurance policy information related to the at least one
policy to the at least one purchasing group; and wherein the insurance
policy information includes a unique identification code associated
with the insurance policy; logic that determines whether an offer
acceptable to the policy owner was received for the at least one
insurance policy; and logic that closes the purchase of the at least
one life insurance policy if an acceptable offer was received, at
least one server that manages an auction process associated with
the at least one life insurance policy.
20. The system of claim 19, wherein the logic that closes the purchase
of at least one life insurance policy includes logic that electronically
delivers the closing documents from the at least one purchasing
group to the policy owner.
21. The system of claim 19, wherein the logic that automatically
notifies the at least one purchasing group of the availability of
the at least one insurance policy for purchase, includes logic that
sends an electronic message to the at least one purchasing group.
22. The system of claim 19, further comprising: logic that makes
available historical information to life settlement brokers and
purchasing groups based on previous settlement transactions.
23. The system of claim 19, wherein the insurance policy information
includes medical records, general policy information on the insured,
and the life expectancy of the insured.
24. The system of claim 19, further comprising: logic that determines
that no acceptable offer was received for the at least one life
insurance policy, and logic that receives submission of changed
bidding requirements for the at least one life insurance policy,
wherein the changed bidding requirements include different terms
and conditions for purchasing the policy, and wherein submission
of the changed bidding requirements is received to the at least
one database associated with the life insurance secondary exchange;
logic that submits at least part of the insurance policy information
to at least one purchasing group, including: logic that automatically
notifies the at least one purchasing group of the availability of
the at least one insurance policy for purchase; and logic that makes
available, to the at least one purchase group, insurance policy
information related to the at least one policy, the information
including changed bidding requirements; logic that determines whether
an offer acceptable to the policy owner was received for the at
least one insurance policy; and logic that closes the purchase of
the at least one life insurance policy if an acceptable offer was
received.
Insurance Description
BACKGROUND OF THE INVENTION
[0001] 1. Field of Invention
[0002] The present disclosure relates to financial services and,
more particularly, to an Internet-based auction or exchange for
a life insurance secondary marketplace.
[0003] 2. Description of Related Art
[0004] The use of life insurance as an assignable asset has been
on the rise for at least the last two decades. This is because circumstances
may arise so that an individual may wish to sell his or her life
insurance policy.
[0005] In a market known as the life settlement market, seniors
may wish to sell their current policies when they already have sufficient
funds to cover estate taxes or other fees and costs. Life insurance
policies may have been purchased to cover these costs, but it may
be decided later that the life insurance is not needed. The life
settlement or senior settlement market has developed in relation
to senior life insurance policies. This market is currently for
insureds over the age of 65 with a minimum of two years' life expectancy
and a maximum of fifteen years' life expectancy. A policy owner
may no longer need a life insurance policy for other reasons. For
example, a key person life insurance policy for an executive may
no longer be needed when that executive leaves the company. Policy
owners may also sell a policy because they can no longer afford
the premiums. Another reason may be that the policy owner is able
to purchase a policy or financial product that better suits their
needs.
[0006] The main participants in the life settlement market may
include policy owners and/or insureds, trusted advisors, life settlement
brokers, purchasing groups and investor groups. The insureds in
the life settlement market are generally seniors who are sixty-five
years of age or older. The insured senior may also be the policy
owner; however, life insurance policies are sometimes purchased
by one individual or entity in order to ensure another. When the
insured is a senior, the policy may be sold in the life settlement
market. Trusted advisors generally represent the policy owner. Trusted
advisors may include certified public accountants, accountants,
bookkeepers, bankers, trust officers, financial planners, estate
attorneys, trust attorneys, corporate attorneys, family law or divorce
attorneys, life insurance agents and stock brokers.
[0007] Life settlement brokers, another participant in this process,
are generally organizations that work with the trusted advisors
to assist the policy owner in selling the policy in the secondary
life insurance market. The brokers offer each policy for sale to
various parties known as the purchasing groups/providers.
[0008] The life settlement process can be divided into four main
process segments. Referring now to FIG. 1, illustrated is a simplified
block diagram 100 of the life settlement process. The process is
divided into the information phase 110, submission phase 120, offer
phase 130 and close phase 140.
[0009] During the information phase 110, each policy must be prepared
for presentation to each separate purchasing group/provider. The
information includes signed HIPAA medical release forms from the
insured, general policy and health information on the insured and
medical records and policy in-force illustrations, just to name
a few.
[0010] During the submission phase 120, the broker generally pushes
the information on the policy to the purchasing groups/providers.
This process is time-consuming and requires effort from the broker's
perspective. During the offer phase 130, the broker determines whether
any offers or acceptable offers are made. If a number of offers
are made, the broker determines the best offer, and the offer is
presented to the client for the close phase 140.
[0011] If no offer or no acceptable offer is made, the policy is
sometimes re-submitted for review by the purchasing groups/providers.
Again, if the broker determines whether any offers or acceptable
offers are made, these offers or the best offer is relayed to the
trusted advisor and client. If a number of offers are made, the
broker determines the best offer, and the offer is presented to
the client for the close phase 140.
[0012] As noted, where no offers or no acceptable offers are made,
the settlement process loops back so that a policy is re-submitted
to the purchasing groups/providers. This loop-back process may require
substantial efforts on the broker's part. Alternatively, the broker
could simply hold the policy until the insured advances in age.
[0013] Moreover, using the current process, an insurance policy
must often be shopped to the purchasing groups/providers who may
not be interested in the policy. It is only through the submission
process that the purchasing groups/providers are made aware of the
policy.
[0014] Most of the communications between the broker and purchasing
groups/providers is faxed or e-mailed. Faxes and e-mails may be
time-consuming and there is generally no central location for electronically
maintaining them. Moreover, there are concerns regarding fraud protection
and protection of the policy owner's sensitive information. Other
concerns include the speed and accuracy of information used in determining
a settlement.
[0015] There is a need for a life insurance settlement process
that reduces the burdens on all those involved. There is a need
for a more efficient way of handling life insurance settlements
so that time and effort are not spent submitting to those purchasing
groups/providers who are not interested in purchasing the policy.
There is further a need for automation of the process between brokers
and purchase groups/providers. There is also a need for a secure
system that addresses fraud concerns and protection of the policy
owner's sensitive information. More than one broker may list the
same policy, thus resulting in confusion as to who actually represents
the policy owner. For example, problems may be encountered when
determining whom should be paid. Moreover, problems may be encountered
in determining the proper representative with whom the sale should
be negotiated.
BRIEF SUMMARY OF INVENTION
[0016] The present disclosure addresses the needs noted above by
providing an auction system and method for a life insurance secondary
exchange. In accordance with one embodiment of the present disclosure,
an auction system is provided for a life insurance secondary exchange.
[0017] The system comprises a memory system that includes life
insurance policy information for at least one life insurance policy
available for purchase, the memory system further including bidding
requirements for the at least one life insurance policy, wherein
the bidding requirements include terms and conditions for purchasing
the policy; logic that submits at least part of the insurance policy
information to at least one purchasing group, including logic that
automatically notifies the at least one purchasing group of the
availability of the at least one insurance policy for purchase;
and logic that makes available, to the at least one purchasing group,
insurance policy information related to the at least one policy;
and wherein the insurance policy information includes a unique identification
code associated with the insurance policy.
[0018] The system further includes logic that determines whether
an offer acceptable to the policy owner was received for the at
least one insurance policy; and if an acceptable offer was received,
logic that closes the purchase of the at least one life insurance
policy. Finally, the system includes at least one server that manages
an auction process associated with the at least one life insurance
policy.
[0019] In accordance with another embodiment of the present disclosure,
a method is provided for a life insurance secondary exchange. The
method comprises the steps of receiving life insurance policy information
for at least one life insurance policy available for purchase, the
information being received to at least one database associated with
the life insurance secondary exchange. The method further comprises
receiving submission of bidding requirements for the at least one
life insurance policy, wherein the bidding requirements include
terms and conditions for purchasing the policy, and wherein submission
of the bidding requirements are received to the at least one database
associated with the life insurance secondary exchange; and storing
life insurance policy information and bidding requirements.
[0020] The method further comprises submitting at least part of
the insurance policy information to at least one purchasing group,
including automatically notifying the at least one purchasing group
of the availability of the at least one insurance policy for purchase;
and making available insurance policy information related to the
at least one policy to the at least one purchasing group; and wherein
the insurance policy information includes a unique identification
code associated with the insurance policy. Finally, the method includes
determining whether an offer acceptable to the policy owner was
received for the at least one insurance policy; and if an acceptable
offer was received, closing the purchase of the at least one life
insurance policy.
[0021] In accordance with another embodiment of the present disclosure,
computer-readable media is provided containing programming that,
when executed on a computer processor, causes the processor to perform
the steps of receiving life insurance policy information for at
least one life insurance policy available for purchase, the information
being received to at least one database associated with the life
insurance secondary exchange. The computer program further contains
programming that causes the processor to accept submission of bidding
requirements for the at least one life insurance policy, wherein
the bidding requirements include terms and conditions for purchasing
the policy, and wherein submission of the bidding requirements are
received to the at least one database associated with the life insurance
secondary exchange; and storing life insurance policy information
and bidding requirements.
[0022] The computer program further causes the processor to submit
at least part of the insurance policy information to at least one
purchasing group, including automatically notifying the at least
one purchasing group of the availability of the at least one insurance
policy for purchase; and making available insurance policy information
related to the at least one policy to the at least one purchasing
group; and wherein the insurance policy information includes a unique
identification code associated with the insurance policy. Finally,
the computer program causes the processor to perform the step of
determining whether an offer acceptable to the policy owner was
received for the at least one insurance policy; and if an acceptable
offer was received, closing the purchase of the at least one life
insurance policy.
[0023] These, as well as other objects, features and benefits will
now become clear from a review of the following detailed description
of illustrative embodiments and the accompanying drawings.
BRIEF DESCRIPTION OF DRAWINGS
[0024] FIG. 1 is a simplified flow chart illustration of the life
insurance settlement process.
[0025] FIG. 2A illustrates a logical system architecture for a
life insurance secondary exchange in accordance with one embodiment
of the present disclosure.
[0026] FIG. 2B is a more detailed logical system architecture for
the core application server in a life insurance secondary exchange
in accordance with one embodiment of the present disclosure.
[0027] FIG. 3 illustrates a hardware architecture for the life
insurance secondary exchange in accordance with one embodiment of
the present disclosure.
[0028] FIG. 4A is a flow chart illustration of the information
phase for an auction-based life insurance secondary exchange.
[0029] FIG. 4B is a flow chart illustration of the submission phase
for an auction-based life insurance secondary exchange.
[0030] FIG. 4C is a flow chart illustration of the offer phase
for an auction-based life insurance secondary exchange.
[0031] FIG. 4D is a flow chart illustration of the close phase
for an auction-based life insurance secondary exchange.
DETAILED DESCRIPTION OF ILLUSTRATIVE EMBODIMENTS
[0032] The present disclosure provides an auction-based method,
computer program and system for a life insurance secondary exchange.
Through a phased process that includes an information phase, a submission
phase, an offer phase and a close phase, a life insurance policy
may be submitted and sold by a policy owner to purchasing groups
via a trusted advisor and/or broker.
[0033] The policy information is received at a central location
or database. Purchasing groups/providers are automatically notified
when a policy is available for sale. The purchasing groups may be
notified by electronic message or other electronic means.
[0034] In addition to notification of available policies by electronic
messaging, the auction-based system and method may include the display
via the Internet of current available policies for purchase based
on select qualities of the policy with regard to market standard,
with a narrative description of the policy, and parameters set by
the life settlement broker or trusted advisor for the purchase of
the policy.
[0035] If interested, the purchasing groups pull further details
on the policies they wish to review. The purchasing groups then
submit offers on the policies. The policy holder then determines
whether an acceptable offer has been made, and sells the policy.
If not, the policy may be efficiently re-auctioned. Moreover, the
close ratio is higher since the policy is only reviewed by those
who are interested in the policy.
[0036] Referring now to FIG. 2A, illustrated is a logical system
architecture 200 for an Internet-based auction exchange in accordance
with one embodiment of the present disclosure. The system architecture
includes application services 205 and associated subsystems 210,
connected via a network 217 to a client web browser 215.
[0037] A user may access application services 205 via web browser
215 and a connection via network 217. The network 217 can be, for
example, a local area network (LAN) or the Internet. The client
screens connect to a series of application services 205, including
servers and managers, which collectively provide all the logic to
enable the system. The specific services invoked are determined
by the particular action undertaken by the user.
[0038] Clients may be defined as any front-end applications, such
as web browsers and forms, that interact with and access core system
functions. The application servers 205 make up the core business
logic enabling the overall system workflow and execution of embedded
business logic. Data access servers 275 provide back-end access
to data and information used by the application servers 205.
[0039] Information may flow through the system 200 by means other
than user input. For example, information may flow via electronic
messaging or image processing, including fax. Application services
205 reside on top of the operating system. All subsystems 210 are
front-ended by dedicated application services 205. For example,
the data is stored or retrieved in a relational database 280 in
subsystem 210 via the data access server 275. Application services
are transparent to the user.
[0040] Audit server 230 supports regulatory compliance in terms
of confidentiality and auditing. Report server 245 provides support
for ad-hoc reporting and trend analysis. Workflow server 225 facilitates
workflow execution required to complete life settlement transactions
by all involved parties. The workflow process is similar to an automated
trading exchange. The elements of application services 205 may be
described as an application server.
[0041] Elements of the application services 205 include those related
to I/O functions which are supported by the web server 220, data
access server 275, message handling server 270, image processing
server 265, billing server 255, hardcopy fax server 260, copy services
250, and report server 245. Security functions are handled by security
server 235 and audit server 230. Auction server 240 is also included
for handling auction-related services. Hardcopy fax server 260 is
used to receive faxes electronically and are not handled. Web server
220 handles web applications. Image processing server 265 handles
documents that are scanned in to the exchange, e.g., .pdf, TIFF
file, JPEG file. Billing server 255 pays the providers whether electronically
or otherwise. Copy services 250 will copy medical records. Copies
on a network can be copied to a file which can be handled by copy
services. Report server 245 may allow the broker to perform research
on the purchasing groups, e.g., billing, list of members, any search
parameters on which a search may be based.
[0042] Other elements of subsystem 210 may include messaging subsystem
285 that supports messaging, task scheduling subsystem 290 that
supports batch scheduling of various system-related tasks, fax subsystem
295 that supports fax transmittals, print subsystem 300 and billing
subsystem 305. Subsystem 210, typically provided by the operating
system, support system functionality by providing services for various
standardized tasks.
[0043] Referring now to FIG. 2B, illustrated is a more detailed
logical system architecture for a core application server in accordance
with one embodiment of the present disclosure. The core application
server 310 is the central part of application services. The core
application server 310 includes the core business logic central
to processing life settlement transactions. The core application
server 310 is composed of multiple services, some directly related
to business processing, others to support business processing. The
core business object or core object library object that is central
to the life settlement process is programmed into the core application
server 310 in order to implement and/or assist in implementing the
methods disclosed herein.
[0044] The system architecture may be based on object-oriented
software principles that result in a scalable, extensible and portable
software architecture.
[0045] FIG. 3 illustrates a hardware architecture for production
and development environments in a life insurance secondary exchange.
The hardware configuration includes a co-location site 367 connected
via a network 371 such as the Internet to corporate site 369.
[0046] The hardware design includes multiple servers widely available.
At the co-location site 367, the servers include web servers 373,
375, application servers 379, 381, production database server 383
and firewall server 377. These servers are clustered, thereby allowing
redundant servers to take over in case of failure by a primary server.
Clustering software is configured to detect failover scenarios and
redirect software-based services as required.
[0047] The web servers 373, 375 are connected to a router, packet
filter, local director 395. At the other end, web servers are connected
via gigabit switch 389 to firewall server 377. Gigabit switch 391
connects application server 379 and PC management console 392 to
a cluster. The cluster includes application servers 381, 383. Redundant
networks are supplied in case of primary LAN failure. Redundant
networks also increase the overall throughput of LAN traffic through
the system. A 10baseT management hub 393 provides connections for
the devices throughout the co-location site 367.
[0048] Storage at co-location site 367 is shared storage 387 connected
to multiple servers. This connection may be made over multiple redundant,
fiber channel connections. Shared storage facilitates high availability
of the auction-based system and increases the flexibility by which
storage is managed and partitioned for use by multiple servers.
The system is being constantly backed up with a tape back up 385.
[0049] Corporate site 369 serves as a separate management LAN that
allows system administrators to monitor and configure servers in
a secure fashion. Management may be done via a local management
station or by secure, remote access over a virtual private network.
Corporate site 369 includes a PC management console 397, development
servers 399 which may be operably connected via 10baseT hub 398
to network 371. Network 371, in turn, connects corporate site 369
to co-location site 367.
[0050] The auction-based method for a life insurance secondary
exchange may be described in accordance with various flow charts
as described in connection with FIGS. 4A-4D. One or more parts of
the method may be implemented in software.
[0051] FIG. 4A is a flow chart illustration of the information
phase 400 for an auction-based life insurance secondary exchange.
In accordance with FIG. 4A, information is gathered pertaining to
the insurance policy and insured. At step 410, the policy owner
and trusted advisor determine that the owner is interested in a
policy sale. At step 420, the auction exchange owner is contacted
regarding the sale of the policy. At steps 430 and 435, the auction
exchange uses a qualifying worksheet to make a preliminary determination
as to whether the policy is marketable. In some instances, the purchasing
group may wish to sell a policy or even a portfolio of policies.
In this case, the purchasing group may become a broker or a trusted
advisor. At step 440, the system determines whether the policy is
already listed. If the policy is already listed, at step 445, the
system informs the broker that the second policy will not be listed.
This eliminates double-brokering because one and only one broker
is listed on the system for each policy. This also eliminates confusion
as to who is representing the policy owner.
[0052] If the policy does not meet marketability requirements,
at step 450, the trusted advisor or life settlement broker and client
are informed as such by the exchange.
[0053] If it is determined that the policy is marketable, at step
460, the trusted advisor or broker obtains from the insured a signed
medical release form that conforms to relevant standards. A disclosure
is signed by the policy owner at step 470. The trusted advisor may
also obtain other information such as general policy, personal and
medical information at step 480.
[0054] With the information that was obtained from the policy owner,
the trusted advisor or life settlement broker obtains illustrations
for the in-force policy based on purchasing group requirements at
step 490. The trusted advisor or life settlement broker also requests
medical records for the insured at step 500, and receives those
records at step 510. Often, a life expectancy report must follow
medical records because medical records are needed in order to make
a determination as to life expectancy.
[0055] A request for life expectancy evaluation may be made at
step 520 when request documents are faxed to one or more actuarial
firms. This evaluation may be performed without a medical examination
since the insured's medical records are faxed or sent by other electronic
means, such as e-mail, to the actuarial firm. The exchange requests
evaluation reports at step 520 and the exchange receives life expectancy
reports at step 530.
[0056] A life expectancy report is received at step 530 after it
has been determined by one or more actuarial firms. (Later, when
the policy is submitted to purchasing groups, if the life expectancy
is within the bounds of the purchasing group's requirements, the
purchasing groups evaluate the cost of maintaining the policy until
the death benefit can be collected. A return on investment may be
calculated using this cost and the death benefit. If the return
on investment is acceptable, an offer to purchase the policy may
be made.) Policy illustrations may be received at step 540.
[0057] The policy is now prepared for the second phase of the life
settlement process, which may be described as the submission phase.
Referring now to FIG. 4B illustrated is a flow chart of the submission
phase for an auction-based life insurance secondary exchange. The
life insurance secondary exchange of the present disclosure permits
all participants in the life insurance settlement process to enjoy
advantages. For example, the submission phase is automated and fewer
faxes are sent between the broker and the purchasing groups. Moreover,
instead of the push policy that may be present in some systems,
the system of the present disclosure includes a centralized automated
way for the brokers and purchasing groups to communicate with purchasing
groups pulling the information needed.
[0058] First, the information gathered at the information phase
is scanned electronically in preparation for use on the auction
exchange. At step 600 of FIG. 4B, steps are taken to prepare electronic
versions of the records and other information retrieved at the earlier
information stage. Reports are scanned and saved as viewable files.
At step 610, these files are uploaded to the auction exchange.
[0059] At step 620, the broker completes applicable bidding requirements
on the auction exchange web site. These requirements may include
timing, including the point when bidding is open and when it is
closed. The bidding requirements may also include the price. Any
other bidding requirements desired may be associated with the policy.
The bidding requirements may indicate that the auction process is
a time-bound process in which purchasing groups bid for life insurance
policies and the purchasing group with the highest bid during the
time specified wins the right to purchase the policy. The bidding
requirements may also indicate that the auction process is a non-time
bound process in which parties contract and negotiate for the selling
price of the policy and reach an agreed upon price for the policy.
[0060] At step 630, an electronic message or telephonic message
is sent to all purchasing groups. These purchasing groups may be
pre-qualified by the exchange, including by determining whether
sufficient funds are available to purchase the policy and by ensuring
that they comply with applicable confidentiality requirements related
to the policy information. If a state license is required in order
for the policy to be purchased, the exchange may verify that such
a license is present. If electronic notification is performed, the
electronic message informs the purchasing groups a new case is available
with a case number and/or unique identification code for the policy.
At step 640, the auction exchange determines whether a purchasing
group is interested in the policy. If not, the submission process
ends at step 670. If, on the other hand, a purchasing group is interested
in the policy, then the auction exchange makes a case description
available in an accessible location, e.g., a web site. The auction
exchange then determines at 660 whether the purchasing group wants
to review the policy. If the purchasing group wishes to review the
policy, then the auction exchange permits the purchasing group to
download medical records, pertinent medical release disclosures,
policy illustrations, a life expectancy report and other information
deemed pertinent to the auction exchange.
[0061] At step 690, the purchasing group evaluates the policy to
determine the bid. The purchasing group determines the bid at step
700, and places a bid for the policy at step 710. If no, then the
process moves to 670 and ends.
[0062] The life settlement process then moves to the offer phase.
The auction exchange may review all offers for the insurance policy
at step 800. Of course, numerous auctions could take place at the
auction exchange simultaneously. Accordingly, each of these various
auctions could be in various disparate phases at any given point.
[0063] Referring now to FIG. 4C, shown is a flow chart illustration
of the offer phase for an auction-based life insurance secondary
exchange. The auction exchange may then determine at step 810 whether
an acceptable offer exists for the life insurance policy at issue.
If no acceptable offers exist, the broker may be notified of this
fact at step 820.
[0064] The broker may then review all offers at step 830. The auction
exchange gives the broker an opportunity to change the terms of
the bidding requirements at step 840. If it is determined at step
840 that the broker does not wish to change the terms of the offer,
the client may be informed at step 850 that no acceptable offers
are available for the policy. The offer phase may then end.
[0065] If, at step 810, it is determined that there is an acceptable
offer for the policy, the life settlement process may enter the
close phase. Referring now to FIG. 4D, shown is a flow chart illustration
of the close phase for an auction-based life insurance secondary
exchange. The offer may be presented to the client at step 1000.
If the client accepts the offer at step 1010.
[0066] If the broker wishes to change the terms of the bidding
requirements at step 840, then the broker, trusted advisor and client
determine acceptable terms for the offer. If the client accepts
the offer after the change of terms to new acceptable terms, the
auction exchange determines whether the client accepts the offer
at step 1010.
[0067] If the client accepts the offer at step 1010, whether as
a result of the change in terms or the result of an offer made based
on the original terms, the purchasing group is notified at step
1030 that the offer is accepted. In 1015, the exchange bills the
purchasing group. The exchange would invoice the purchasing group
or buyer, or the purchasing group could be included as part of the
escrow fees. It is possible that all purchasing groups may be billed
if they use the life expectancy report. The purchasing group opens
an escrow account at step 1040, and the purchasing group sends the
closing documents electronically at step 1050. The client reviews
the closing documents at step 1060, and assigns death benefits to
the purchasing group at step 1070. The client signs closing documents
at step 1080.
[0068] The purchasing group deposits funds into escrow for the
purchase at step 1090. The escrow money is sent to the policy owner
at step 1100 and other closing documents are sent to the escrow
group. Once escrow closes, the policy owner may have a waiting period
to change his or her mind at step 1110. The auction exchange determines
whether the policy owner keeps the funds at step 1120. If the policy
owner keeps the funds, the sale closes at step 1130. If the auction
exchange determines that the client is not to keep the funds at
step 1120, the funds are returned to the purchasing group at step
1140. At 1125, the exchange is paid. If the policy owner changes
their mind, then the funds cannot be kept by the policy owner. If
the policy owner does not change its mind, they may keep the funds.
[0069] The auction-based method and system may also include an
on-line feature where both life settlement brokers and purchasing
groups can obtain historical information based on previous life
settlement transactions. The auction-based system and method may
also provide for storage of the life insurance policies, medical
records and unique policy information that have not been sold, but
might be eligible for sale at a later date. Providing historical
information and storage of the policy information facilitates re-auctioning
of the policy.
[0070] The medical information, policy information and other information
related to the insured and/or policy owner can also be used to purchase
new life insurance policies.
[0071] The auction-based system and method described herein may
provide benefits to all parties involved, including the senior clients,
the trusted advisors, the life settlement brokers and purchasing
groups. The senior clients could benefit by having maximum exposure
for their policies in a competitive environment in order to ensure
the best price for the policy. The system and method of the present
disclosure may assist in giving the senior clients confidence in
a self-regulated environment in which personal information can be
exchanged. The auction-based system and method may further provide
senior clients trust because all parties involved sign a code of
ethical conduct that can be enforced, and the seniors may also feel
secure in knowing that only the information needed is provided.
The exchange provides a safe and secure selling environment. Moreover,
privacy is maintained since personal information is obtained by
purchasing groups that are interested in purchasing the policy.
[0072] The trusted advisors may experience benefits from this system
in that they can be confident that this auction-based system and
method will provide their clients with the best price for the policy.
The trusted advisors may also feel secure in knowing client information
is protected and that all partners have signed a code of ethical
conduct and agreed to a compensation structure. The exchange provides
easy access to the secondary life insurance market. It establishes
a safe, secure and professional environment. It is also a potential
source of income for the trusted advisors.
[0073] The life settlement brokers can have confidence in representing
their trusted advisor's clients that will give the client the best
price for the policy. Expense associated with brokering life insurance
policies may be minimized while exposure is maximized. Moreover,
all competitors are using similar rules in participating in the
policy sale. Brokers are able to control the selling environment.
Brokers are also provided with flexible selling options to meet
the selling requirements. No double-brokering occurs because only
one broker is permitted to list a single policy. The brokers have
access to comparable previous transactions via historical information.
[0074] Purchasing groups can have confidence in knowing that they
can view a large number of insurance polices on the exchange. Moreover,
concerns regarding fraud and double-brokering may be reduced. Purchasers
now have immediate access to policies that they would not be otherwise
able to access. The exchange brings qualified buyers and sellers
together. Purchasers are able to perform a more targeted search
for policies that fit specific parameters. This is important because
they can build portfolios of policies and sell bonds against that
portfolio. Ratings companies have specific guidelines for these
policies. Using the exchange, purchasing groups can more easily
build conforming portfolios.
[0075] While the specification describes particular embodiments
of the present invention, those of ordinary skill can devise variations
of the present disclosure without departing from the inventive concept.
[0076] It should also be understood that, while the embodiments
are described in terms of life insurance policies, the insurance
policy could be any other type of insurance policy that can be sold
by one party to another. |