Life Settlement Research Articles

Pricing Life Contingencies Linked to Impaired Life Expectancies Using Intuitionistic Fuzzy Parameters

Several life contingency agreements are based on the assumption that policyholders have impaired life expectancy attributable to factors, such as lifestyle, social class, or preexisting health issues. Quantifying two crucial variables, augmented death probabilities and the discount rate of projected cash flows, is essential for pricing such agreements. Information regarding the correct values of these parameters is subject to vagueness and imprecision, which further intensifies if impairments must be considered. This study proposes modelling mortality and interest rates using a generalization of fuzzy numbers (FNs), known as intuitionistic fuzzy numbers (IFNs). Consequently, this paper extends the literature on life contingency pricing with fuzzy parameters, where uncertainty in variables, such as interest rates and death probabilities, is modelled using FNs. While FNs introduce epistemic uncertainty, the use of IFNs adds bipolarity to the analysis by incorporating both positive and negative information regarding actuarial variables. Our analysis focuses on two agreements involving policyholders with impaired life expectancies: determining the annuity payment in a substandard annuity and pricing a life settlement over a whole life insurance policy. In particular, we emphasize modelling interest rates and survival probabilities using triangular intuitionistic fuzzy numbers (TIFNs) owing to their ease of interpretation and implementation.

Analysing the Potential of Life Settlements in Emerging Markets: A Systematic Review of Legal and Economic Considerations

With time, the law and economics of insurance have advanced from considering it solely as a security measure to recognising it as an asset class. Numerous companies now offer loans against these life insurance policies, accepting the ‘property’ nature of life insurance behind the veil (Doherty & Singer, 2003; Mancini & Murphy, 2012; Mazonas, Stallard & Graham, 2011). Recently the world witnessed sudden deaths at large scale during the COVID-19 pandemic. A study indicates that financial crisis is a major reason of acute stress and instability in adults’ lives (Karim & Shetu, 2023; PK, TK & PK 2021) In such crisis situations, the secondary market assignment of life insurance policies could have been a boon for any person facing financial difficulty or not having a living family member/nominee. The market for life settlements flourished during HIV-AIDS crisis in the USA and has shown steady growth since then in various jurisdictions of the world. However, in India, the doors for secondary market trading were closed in 2015 through a statutory amendment to the Insurance Act, 1938 presently in force in India. Contemporary academia is divided on necessity of the requirement of insurable interest on the secondary market assignment of insurance policies. Other legal issues such as moral hazard, and ethics of trading on life are debatable as well. The preliminary investigation revealed a scarcity of papers discussing these legal considerations around life settlements. However, among the top 10 countries 2023in the global life insurance ranking, five are emerging markets including India having immense potential for life settlements market (Anon, 2021). Consequently, the researcher conducted a scientific SLR using PRISMA Method, along with reviewing selected papers in full, focusing on the legal and related economic considerations, to produce valuable insights for the emerging market. This paper presents the sole effort to pursue SLR on legal issues and put them in a place with the aim to ignite the discussion on legal considerations of life settlements. Importantly, this paper considers India as an emerging market for reference and the USA as a benchmark for established market. This paper adopted a theoretical approach to fulfill the need for legal analysis complimented with secondary data analysis.

On the Modern Significance of the Theory of “Settlement of Life” in Confucian Culture

On the Modern Significance of the Theory of “Settlement of Life” in Confucian Culture

The main content and modern value of PRE-Qin Taoism life thought

The cultural origin of Taoism life thought includes: the mythological origin contained in matriarchal society, the rebirth conveyed by reproduction worship, and the wisdom of heaven and man nourished by witchcraft history culture. Taoism life thought is composed of life view, life and death view, rebirth theory and health theory. Taoism life thought has the distinct characteristics of life standard, natural concern and transcendent intention. The Taoist concept of “reverence for life” and “maintenance of life” is of enlightening significance to the settlement of life.

Analysing the Potential of Life Settlements in Emerging Markets: A Systematic Review of Legal and Economic Considerations

Analysing the Potential of Life Settlements in Emerging Markets: A Systematic Review of Legal and Economic Considerations

Life settlement pricing with fuzzy parameters

Existing literature asserts that the growth of life settlement (LS) markets, where they exist, is hampered by limited policyholder participation and suggests that to foster this growth appropriate pricing of LS transactions is crucial. The pricing of LSs relies on quantifying two key variables: the insured's mortality multiplier and the internal rate of return (IRR). However, the available information on these parameters is often scarce and vague. To address this issue, this article proposes a novel framework that models these variables using triangular fuzzy numbers (TFNs). This modelling approach aligns with how mortality multiplier and IRR data are typically provided in insurance markets and has the advantage of offering a natural interpretation for practitioners. When both the mortality multiplier and the IRR are represented as TFNs, the resulting LS price becomes a FN that no longer retains the triangular shape. Therefore, the paper introduces three alternative triangular approximations to simplify computations and enhance interpretation of the price. Additionally, six criteria are proposed to evaluate the effectiveness of each approximation method. These criteria go beyond the typical approach of assessing the approximation quality to the FN itself. They also consider the usability and comprehensibility for financial analysts with no prior knowledge of FNs. In summary, the framework presented in this paper represents a significant advancement in LS pricing. By incorporating TFNs, offering several triangular approximations and proposing goodness criteria of them, it addresses the challenges posed by limited and vague data, while also considering the practical needs of industry practitioners.

The shock of COVID‐19 and the shock of rapid vaccine development on the value of senior life settlement contracts

AbstractIn this paper, we develop a model that can capture how COVID‐19 and the subsequent rapid vaccine development against COVID‐19 impacts the value of pools of senior life settlements. The pandemic unexpectedly boosted the mortality rates of senior citizens who had prior diagnoses of certain health conditions. Our model accounts for the existence and concentration of these COVID‐19 comorbidities in portfolios of senior life settlements. It is the concentration of assets linked to the mortality rates of a group who is at elevated risk to COVID‐19 and who is also the primary beneficiaries of the COVID‐19 vaccine that we examine. We illustrate how the shock of the pandemic increases the value of senior life settlements and how the accelerated development and distribution of COVID‐19 vaccines moderated this increase. Our model is general enough to simulate the impact on other financial contracts that are linked to individual mortality rates. These would include life insurance contracts, annuities, and health insurance policies.

Combining fsQCA and PLS-SEM to assess policyholders’ attitude towards life settlements

Life settlements (LSs) can be considered a novel and innovative financial asset in countries where they are not yet established. This paper aims to assess the attitude (ATT) of policyholders towards participating in LSs in such countries by evaluating various variables: performance expectancy (PE), expected easiness (EE), social influence (SI), perceived ethical problems (EP), and bad feelings (BF) that may arise from this type of transaction. To achieve this goal, a questionnaire was administered to 89 individuals in Spain who possessed extensive knowledge of financial and insurance matters. The data analysis employed fuzzy set qualitative comparative analysis (fsQCA) as the basis, supplemented by partial least squares-structural equation modelling (PLS-SEM). The fsQCA results enabled the identification of policyholder profiles associated with the acceptance or rejection of LSs. Meanwhile, PLS-SEM provided insights into the net strength and statistical significance of the impact of each variable on ATT. Methodologically, this study demonstrates that fsQCA is valuable in constructing a reliable and concise framework for subsequent PLS-SEM estimation. A significant practical implication of this research is the importance of the interaction between PE and SI in the successful development of LS markets. A positive perception of financial advisors regarding these agreements emerges as a crucial factor in market growth. Moreover, the study reveals that EP and BF may significantly influence resistance towards LSs.

Implementation of E-Court in Civil Life Settlement to Realize Simple Principles Quickly and Low Costs (Study in Malang District Court Class 1a)

The development of technology and information in the digital era as it is today is a significant change in human behavior. The digital era as it is today requires all elements of society and institutions to meet the needs of the community related to the development of this era. On the basis of this fulfillment, the Supreme Court has created an e-court application. This research is a type of empirical legal research. Empirical legal research is oriented to primary data (research results in the field). As for the results of this study, the implementation of e-court at the Malang District Court has been implemented in accordance with Perma No.1 of 2019, there are 4 features of e-court services, namely registration, payment, summons, and trial, all of which are held electronically. This is also an effort made by the Supreme Court to modernize the judicial process in Indonesia without eliminating aspects that existed in the previous judicial system, namely maximizing the existing potential with the support of information and communication technology. In line with the suitability of the simple principle of fast and low cost, the number of cases at the Malang District Court that entered via e-court in 2019 to 2021 reached 4,985 cases, namely civil cases that include applications, lawsuits, simple claims, and objections. In 2019 there were fewer cases that went through compared to cases that went through the manual procedure, but over time the e-court became effective, and manual case registration began to be abandoned. The effectiveness of e-courts in the settlement of civil cases at the Malang District Court has been running effectively since 2020, namely the examination and settlement of issues are carried out in an efficient and effective manner, and at a cost that the community can reach.

Sustainability Contested: Analysis of Stakeholders Participation in Municipal Solid Waste Management - A Case Study

Waste has always been a part of human life settlement and we have been either very careless with our waste by discarding it into the streets, the air, water, and in our backyards, or consciously dumping it close to those least powerful segments of the society at all times. Waste has been a problem for human beings and people have been least concerned about its eco-friendly disposal. Developed countries came up with many programmes, regulations and policies to address the municipal solid waste crisis, but still it is an unresolved problem. Municipal solid waste management is still a complex issue everywhere in the globalized and techno scientific world due to the carefree mindset, rapid urbanization process, unscientific development process and lack of social responsibility. In these circumstances, municipal solid waste managementcannot be addressed by mere technological innovations or adoptions. Moreover, the responsibility of municipal solid waste managementcannot be left to the Government alone. Instead, participation of various stakeholders needs to be ensured and coordinated for achieving sustainability. Taking Thiruvananthapuram Municipal Corporation in the state of Kerala, India as a case, this paper discusses the extent and ways in which various stakeholders engage in the two main approaches for municipal solid waste management, namely- centralized approach and decentralized approach. The research study was conducted during the period June, 2020 to December, 2020.

Factors influencing policyholders' acceptance of life settlements: a technology acceptance model

Factors influencing policyholders' acceptance of life settlements: a technology acceptance model

Life settlements: análisis descriptivo y aspectos cuantitativos

A life settlement is a financial transaction by which an existing life insurance policy is sold to an investor for a greater price than its cash surrender value. In this way, the investor undertakes to pay, if any, the outstanding premiums and has the right to receive the death benefit when the insured dies. This work carries out a descriptive analysis of this type of transaction and a study of its main quantitative aspects. Thus, among other aspects, an overview of the product is offered and its main agents, the nature of the parameters involved in its value and the risks related to it are described. In regards to the quantitative point of view, a new way of analysing the sensitivity of the price of a life settlement to changes in the insured’s life expectancy is introduced. Indeed, we extend the duration and convexity indicators of Stone and Zissu (2008), which use a deterministic approach, to the analytical framework provided by the probabilistic valuation method. Then, we propose to measure the sensitivity of this product to changes in the insured’s mortality multiplier, and not in their life expectancy. The paper also describes the applicability of the new measures for risk management purposes.

Inclusion of ionizing radiation in a mathematical model for photosynthesis.

Ionizing radiation of astrophysical origin might have played an important role in biological evolution during the long course of Earth's evolution. Several phenomena might have induced intense fluctuations in background ionizing radiation, such as highly energetic stellar explosions. There might also be anthropogenic causes for environmental radiation fluctuations, resulting from nuclear industry activities. The inclusion of these effects in a mathematical model for photosynthesis provides a useful tool to account for the damages of the above-mentioned phenomena in vegetal life. Mathematical models for photosynthesis typically only consider ultraviolet radiation and photosynthetically active radiation, as they have been a ubiquitous physical factor in the settlement of vegetal life. In this work a mathematical model for aquatic photosynthesis is modified, from first principles, to include the action of particulate ionizing radiation on the photosynthetic process. After assuming an ansatz allowing to separate damage/repair kinetics of ultraviolet and ionizing radiations, a treatable mathematical expression of the model is obtained. This generalized model is presented as a function of radiometric and photometric magnitudes, making it prone to calibration and useful to apply to aquatic ecosystems under radiational stress due to gamma-ray bursts, cosmic ray bursts, solar storms, or other sources of ionizing radiations.

Evaluating Medical Underwriters in Life Settlements: Problem of Unreported Deaths

The valuation of policies in the life settlement market hinges upon life expectancy assessments provided by medical underwriters. Because accurate assessments are essential to the market functioning well, determining so is of interest to various stakeholders, including regulatory bodies. As a third party to settlement transactions, these underwriters, and hence their auditors, have to rely on public sources in compiling mortality data on underwritten insureds. Such acquired data are known to contain a significant proportion of unreported deaths. Accurate accounting for their presence is crucial to a fair evaluation of an underwriter’s methodology. However, existing methods for doing so either rely solely on actuarial opinion or are based on assumptions untenable in the life settlement context. Toward developing a practical data-driven methodology for consistently estimating mortality in the presence of unreported deaths, we propose the IBNR (incurred but not reported) rate model. This adaptation of the cure rate model accommodates the heterogeneity in the rates of both mortality and unreported deaths seen in practice. Our methodology thus facilitates an accurate and objective evaluation of an underwriter.

Explaining the risk premiums of life settlements

Life settlements may facilitate a more efficient insurance market, generate diversification benefits to investors, and even provide hedging benefits to Asia life insurers. The literature does not investigate what determines the risk premiums of life settlements, and we intend to fill this gap. We find that in spite of the premium for non-systematic mortality risk being substantial, the systematic premium is insignificant. On the other hand, the impact of tax on the life settlements' spreads is material. We further find that life settlements have negative betas and are quality assets when investors face market turmoil. The proprietary information provided by medical underwriters and the surrender behavior of the underlying policyholders are also significant determinants of the rate spreads for life settlements.

An actuarial model of arrhythmogenic right ventricular cardiomyopathy and life insurance

Many countries ban insurers from using genetic test results in underwriting. One study [Howard, R. C. W. (2014). Report to CIA research committee: Genetic testing model: If the underwriters had no access to known results. Canadian Institute of Actuaries (CIA).] stated that such a ban in Canada would expose life insurers to adverse selection, causing premiums to increase by 12%. More than a quarter of this cost was attributable to a single disorder, Arrhythmogenic Right Ventricular Cardiomyopathy (ARVC). We model ARVC in a life insurance market, following the methodology of [Haçarız, O., Kleinow, T. & Macdonald, A. S. (2021). Genetics, insurance and hypertrophic cardiomyopathy. Scandinavian Actuarial Journal 2021, 54–81.], including ‘cascade’ genetic testing (CGT), so the rôle of family history in underwriting is modelled explicitly. We review (in the Appendix) the published epidemiology of ARVC, in particular the existence of an effective treatment, which we also include in our model. Our results are consistent with those of [Macdonald, A. S. & Yu, F. (2011). The impact of genetic information on the insurance industry: Conclusions from the ‘bottom-up’ modelling programme. Astin Bulletin 41(02), 343–376.] and [Haçarız, O., Kleinow, T. & Macdonald, A. S. (2021). Genetics, insurance and hypertrophic cardiomyopathy. Scandinavian Actuarial Journal 2021, 54–81.], namely, that in realistic scenarios premium increases would be negligible. We also consider the possibility of life settlement companies ‘gaming’ insurers by learning of adverse genetic test results, and conclude that to profit from purchasing policies from affected individuals, they would have to predict the future trajectory of the epidemiology of ARVC better than the epidemiologists themselves.

Viaticals in the COVID-19 Pandemic Era

Viaticals are life insurance settlement contracts where the investor purchases a life insurance policy from a terminally ill policyholder. In these cases, the present value of the policyholder’s cash flows is substantially above the cash surrender value and below the face value of the policy. The COVID-19 virus (also referred to as SARS-CoV-2 or the coronavirus) has killed and shortened the expected lifespan of many victims, much like HIV-AIDS and other terminal illnesses. This paper suggests a valuation model for a life settlement contract as the framework to contrast the usefulness of viatical contracts during the current COVID-19 pandemic compared to the HIV/AIDS crisis. Contrasting the diseases leads us to believe that viaticals are less useful for dying COVID-19 victims, although they may prove useful for a subset of COVID-19 survivors who suffer life-shortening organ damage.

Gandhian Model of Community Development

Gandhian Model of Community Development (GMCD) is a sustainable development model for governments in the central, provincial, and local levels of democratic federal countries in the world by the scientific analysis of Gandhian ideology in a specified community. Community Development is a method, a strategy, and a campaign to uplift human life settlements and to solve the community problems from a simple local perspective. The human settlement with local communal acceptance, local norms, and values, environmental protection, help and cooperation, trusteeship, health, education, sanitation, training, transportation, marketing, etc. are the major components of the Gandhian Model of Community Development. The global acceptance with local initiation, norms, knowledge and practices in the positive changes on human life is Gandhian Community Development. It is the core ideological view of the great leader of south Asia-Mahatma Gandhi. Mahatma Gandhi is also pronounced as second Buddha of the world.
 The main objective of the study is to develop a Gandhian Model of Community Development with the incorporation of thoughts and ideologies of Mahatma Gandhi. The study is the collection of Gandhian ideology with a programmatic model for the future development of the human being specified within the boundary with the specified indicators of the Gandhian Model of Community Development. It is a hermeneutic and historical interpretation of three universal truths- Generation, Operation, and Destruction for the liberation of human beings from a sustainable development strategy guided by Mahatma Gandhi. His ideas are herminuted in contemporary sustainable community development. In conclusion, the Gandhian Model of Community development is a model having Balance Sheet of Production and Consumption within the specified municipality and Gandhian Development Indicators for human liberation or development toward ultimate freedom.

Will genetic test results be monetized in life insurance?

AbstractIf life insurers are not permitted to use genetic test results in underwriting, they may face adverse selection. It is sometimes claimed that applicants will choose abnormally high sums insured as a form of financial gamble, possibly financed by life settlement companies (LSCs). The latter possibility is given some credence by the recent experience of “stranger‐originated life insurance” (STOLI) in the United States. We examine these claims, and find them unconvincing for four reasons. First, apparently high mortality implies surprisingly high probabilities of surviving for decades, so the gamble faces long odds. Second, LSCs would have to adopt a different business model, involving much longer time horizons. Third, STOLI is being effectively dealt with by the U.S. courts. Fourth, the gamble would be predicated upon a deep understanding of the genetic epidemiology, which is evolving, subject to uncertain biases, and cannot predict the emergence of effective treatments.

A transformative service research for healthy transition to adulthood of young people living alone in Korea.

This study was conducted to explore phenomena related to the physical, psychological and social health vulnerabilities of young people who lived alone and to establish strategy for service implementation to facilitate their healthy transition to adulthood. In accordance with the double diamond process of service design, five workshops involving 12 participants and 9 experts were held from July to November 2018 in the D-district of Seoul, Korea. As a result, the participants were identified as a difficult group to engage in health management because of their features: unconcern for health, inevitable neglect for health or fixation of lifestyle far from health. They were also a special group that was undergoing a double transition: the transition to adulthood and from living with their parents to living alone. Therefore, the strategy for them was derived that had to be in an indirectly and incidentally effective for health through the settlement of independent life and habit formation by transitional care as part of a nudge effect. The findings of this study can provide a basis for health and social care strategies and policies concerning young people who live alone. A follow-up study is proposed, which will involve the actualisation and application of a program based on the intervention strategy derived from these findings.