What You Need To Know

  • The intent of the original policy purchaser matters.
  • Some cases involve the cost of keeping the policies in force.
  • Disagreements about life expectancy estimates drive other cases.

Legal disputes in the life settlement industry are becoming more frequent and more costly.

As expectations rise and markets evolve, lawsuits are increasingly testing how courts interpret contracts, disclosures, and industry practices.

Background: The Problem at Hand

The number of lawsuits is rising, often fueled by unrealistic expectations about policies, premiums, or returns.

A few high-profile cases illustrate the stakes:

Delaware’s Price Dawe decision: The state’s Supreme Court ruled that STOLI (stranger-originated life insurance) policies are void from the start because they lack a legitimate insurable interest.

Translation: if a policy was created as a pure investment vehicle, it can’t be enforced.

Origins matter as much as the disputes that come years later.

New York’s AXA Equitable case: When AXA abruptly raised the cost of insurance charges, policyholders sued.

The class action resulted in a $307 million settlement, which a judge described as “outstanding under any metric.” The takeaway: Credible analysis and data can significantly influence outcomes.

Emerging Litigation Trends

Beyond these landmark rulings, life settlement disputes often involve:

◆ Premium increases leading to lapses or reduced value.
◆ Life expectancy disputes that affect pricing and valuation.
◆ Allegations of misrepresentation or fraud against intermediaries and insurers.

The litigation is rarely about a single, headline-grabbing issue.

Instead, the dispute conflict involves layers of financial, contractual and actuarial detail.

Why Expert Insight Matters

When lawsuits arise, expert witnesses play a different role than most advisors expect.

They don’t just “validate” an argument; they help courts understand a complicated market.

Clarifying the story: Judges and juries require clear, plain-language explanations of how the industry operates and why specific details are important.

Spotting red flags: Experienced eyes can find the small disclosure or pattern that shifts the balance of a case.

Shaping discovery: Knowing which documents really matter keeps litigation efficient and credible.

A Lesson from the Field

In one case, what began as a valuation dispute hinged on a single missing disclosure.

At first, it seemed minor. Opposing counsel turned it into a fraud argument, and the case flipped.

It’s often the smallest, overlooked detail — not the obvious one — that decides outcomes.

The High Stakes

Life settlement disputes can involve hundreds of millions in claims.

Cutting corners on expertise is not a bargain; it’s a liability.

The industry’s future depends not only on winning cases but also on ensuring the market remains a fair and reliable source of financial freedom for seniors and a transparent asset class for investors.

Wm. Scott Page is a pioneer in the life settlements market, the president of PolicyAppraisal.com, the man who recruited Betty White to help market life settlements, and an expert witness in life settlement litigation.

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