Life Partners in Waco, Texas offers Life Settlements. We had a policy mature in October of and did not receive the full amount of premium due us. We have since checked with other life settlement firms, and had we invested with them we would have we would have received an additional premium refund. Below is a letter I wrote to Mark Maremont, Senior Editor the Wall Street Journal, as he has written and article and been very critical of Life Partners. I will be happy to speak with any and all potential investors, and give them the straight story about Life Partners, and LPHI in Waco, Texas.
Dear Mr. Mark Maremont
Senior Editor the Wall Street Journal
I sent this letter to Mr. Brian Pardo and Mr. Scott Peden prior to sending it to you, as it is not my intention to blind-side anyone.
I am familiar with some articles you have written concerning Life Partners in Waco, Texas, which is why I’m contacting you. This letter pertains to what I consider to be unfair business practices by Life Partners.
We currently own 10 life settlement policies which we purchased through Life Partners in 2008 and 2009. However, we will not purchase any additional policies from Life Partners, nor will we recommend them as a good source for Life Settlements. Since I consider life settlements to be a good investment, I will continue to purchase policies, but from other vendors, and in my opinion, there are other firms with better business models, plus they are much more responsive to their clients.
We have two main concerns with Life Partner’s at this time.
1. Life Partners pays the premium on the policies one year in advance, and this costs us over $1,500 on a maturity. The policy had a four year life expectancy, and the policy matured just 15 days into the fourth year. The annual premium was $1,646.29, and had they paid the premium on a monthly basis I, along with many other investors, would have received an additional $1,509.09.in my opinion, Life Partners IS NOT working in their clients’ best interest. I’m sure it takes some additional work to pay the premiums on a monthly basis however, everything is computerized and once it is set up, it would be automatic.
I checked with another company which offers fractional units of life settlements, and was informed they pay premiums on a monthly basis. I will be purchasing life settlements from this firm in the future.
The policy in question, had a four year life expectancy, therefore premium was escrowed by Life Partners for four years, and paid annually to the insurance company. The premium escrowed is actually the investor’s money, as it is included in the cost of the initial investment.
2. Our second concern is the determination of the life expectancies, and this is mainly aimed at our initial purchases. Until this year, Life Partners used only one party to determine the life expectances, and that was a Dr. Cassidy. They are now using Dr. Cassidy and 21st Services to determine the Life Expectances. On April 11th we received the correspondence below, which caused us a great deal of concern about policies we own, since Dr. Cassidy was the sole determining factor for our fractional units of policies. Life Partners’ correspondence is in blue:
All future policies will simply be escrowed to the longest of the two LE's:
Below are the LE's and the escrow periods for the existing available policies.
(1) is Dr. Cassidy
(2) is 21st Services
(3) is months escrowed
(1) Dr. Cassidy 60 60 60 60 48 48 72 48 60 60
(2) 21st Services 78 82 66 66 61 50 93 24 99 88
(3) Months Escrowed 84 84 84 84 84 50 93 48 99 88
The difference in Dr. -18-22-6 -6-13-2 -21 12-39-28
Cassidy’s Life Expectances
and 21st Services Life Expectances.
Our concern is that, with the exception of one policy, Dr. Cassidy has set the LE up to 39 months shorter than 21st Services, which is of concern to us, and I’m sure many other folks. This is an average of a 12 year shorter life expectancy, for the 10 policies above, determined by Dr. Cassidy, as compared to 21st services. One can read many things into the disparity of these numbers, and in our case, none of them are good.
Up until Dr. Cassidy was the individual determining the Life Expectancies for Life Partners. Dr. Cassidy figures that everyone will pass in the number of months that can be equally divided by 12, which is also curious.
Using Life Partners’ figures, I see a problem with life expectancies from 2004 through the first part of 2010. Granted, no one can say for sure when someone will pass, however one would conclude that actuarial firms would certainly be more accurate than one individual.
Life Partners has published the figures below, which also seems to help prove my point.
Since January till April Life Partners has purchased 744 policies.
• 31 have matured early.
• 61 have gone longer than the estimated LE and additional premium is being paid.
• 652 are still within the estimated LE.
These numbers above will certainly not make anyone happy. We are now in late December and 35 policies have matured, according to Life Partner’s figures. Using their figures, an average of five (5) policies have matured each year since and this is unacceptable. Going forward, if an average of 50 policies mature each year, it will take over 14 years for all the policies in house, as of April to mature. I seriously doubt that 50 policies will mature each year for the next few years. Obviously, all the policies will mature, however folks will make far less than Life Partners projected.
Granted, I am not an expert on life expectancies, however one would think that the numbers that went early would be closer to the numbers that went long, and it appears the disparity will increase as we go forward.
I e-mailed both Mr. Brian Pardo, and Mr. Scott Peden, who ignored my original e-mail. I sent a second e-mail, stating I would e-mail you and the WSJ, if I didn’t hear from them shortly. I received an immediate response along with an apology for not getting back with me sooner.
I have enclosed all correspondence, to and from Life Partners, with this e-mail. Mr. Peden reminded me that I had received a great return, and should be very happy. He also attempted to compare the life insurance premium to a homeowner’s premium; I haven’t figured out the relevance of that analogy. I am not unhappy with the ROI we received, but I am unhappy that we have not received all of the premium, we are due, as it is our money. Should we have a premium call, in the future, I’m very sure they will want an premium for an entire year in advance. Should the policy mature in less than 12 months, I would expect a premium refund for premium not used. Judging from how Life Partners has treated our recent maturity, I will be out a year’s premium, regardless of when the policy matures.
Once again, all correspondence is enclosed.
Thank You,
Van Walker
(Personal Information Removed)
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