ILMA Guiding Principles
The Institutional Life Markets Association, Inc.
(ILMA) is a trade association comprised of a number of the world’s
leading institutional investors and intermediaries in the mortality
and longevity marketplace, formed to encourage the prudent and
competitive development of a suite of evolving mortality and longevity
related financial businesses, including the businesses of life
settlements and premium finance.
Life insurance is one of the most important financial assets
a consumer owns, and the prudent regulation of the life settlement
and premium finance industries is critically important to a
consumer’s ability to acquire such asset and, during the
term thereof, to realize all of the economic opportunities associated
To help bring consensus among the various life insurance companies,
life settlement providers, brokers, banks, premium finance lenders
and other participants in the life settlement and premium finance
industries, and to facilitate the promulgation of appropriate
regulation and the development of industry “best practices,” ILMA
has formulated the following guiding principles to be considered
when conducting business in this marketplace.
Transparency. Consumers are entitled to transparency when engaging in life settlement and premium finance transactions.
Accordingly, a consumer’s representative should disclose
all bids received and provide full disclosure of all fees and
commissions payable to such representative. Industry participants
should not engage in premium finance transactions designed to
conceal the nature of a transaction from life insurance companies.
When a consumer applies for a life settlement or premium finance
program, an advisor should emphasize the consumer’s obligation
to complete the application truthfully and accurately.
Suitability. Life settlements and premium finance loans
are not appropriate for everyone. Industry participants should
advise consumers applying for life settlements or premium finance
loans to seek competent, professional advice to fully understand
the risks involved and to determine whether a transaction is
right for them.
Consumer Choices. Consumers should have the ability
to choose how to finance their life insurance policy and whether
to hold the policy to maturity, surrender it for cash surrender
value or settle it in the secondary market. Regulations that
unnecessarily restrict such choices are anti-consumer and should
not be supported.
Fiduciary Duty. Life settlements and premium finance
loans are complex financial transactions. Consumer representatives
such as agents, brokers, and other advisors should be mindful
of the fiduciary duty they owe to consumers who participate
in such transactions, including helping consumers understand
the value of a policy and how best to realize this value. The
nature and scope of this fiduciary duty should be explained
and defined at the start of the professional relationship.
Insurable Interest Principle. Industry participants
should support laws designed to deter transactions that seek
to evade insurable interest laws and principles.
Policy Origination. No person should pay, directly or
indirectly, an inducement to any prospective policy owner or
insured for taking out a life insurance policy. Offers of “rebates,” “
free insurance” and similar questionable incentives should
Protection of Insured’s Identity. Industry participants
should develop and implement procedures designed to appropriately
safeguard the identity of insureds engaging in life settlement
and premium finance transactions. These participants should
make every effort to prevent the inappropriate disclosure of
confidential information relating to an insured or to a particular
Competition. A well regulated and competitive marketplace
best serves the interest of consumers and industry participants.
Industry participants should not support or engage in practices
that seek to unlawfully restrict competition.
Marketplace Education. Industry participants should
seek to educate consumers, investors and others on legislative
and administrative developments affecting the life settlement
and premium finance industries. These persons should also seek
to provide a forum for interested parties to examine and review
With these Guiding Principles as a basis, ILMA looks forward
to engaging in a dialogue with the leaders of the life settlement
and premium finance businesses to promote common interests and
objectives and to develop industry “best practices.” ILMA
also looks forward to working with legislators and regulators
to help design appropriate and consumer-oriented regulation.