How a Policy Appraisal Protects Client Privacy
Privacy issues have been at the forefront of the life settlement industry since it began more than 25 years ago. The industry pre-dates the landmark Health Insurance Portability and Accountability Act of 1996 (HIPAA), and from its earliest days, we have had concerns about the private information of policy sellers being mishandled during a life settlement transaction. And unfortunately, despite regulations like HIPAA and best practices that are adopted by many companies, the process of determining the value of a life insurance policy is still sadly quite old school. And with this comes lots of potential problems for agents and their clients.
Personal privacy. First, let's talk about why a life settlement transaction must be private. Aside from the fact that what a person does with their money is no one else's business, a big part of the privacy equation is that the client may very soon have a financial windfall. They may get more cash than they have ever seen in their life, and they certainly don't need everyone to know about it: not their relatives or the guy down the street with a “can’t miss” investment opportunity. At its most basic level, a life settlement transaction needs to be private.
Financial privacy. The next critical aspect is financial privacy and financial identity. Many life settlement brokers and providers require detailed financial information so that a policy can be reviewed, but they don't do an adequate job of keeping that information secure. We still hear about paper documents with private financial information being sent over email, postal mail, and even (cue gasp) fax. Clients are sometimes anxious to forward information that should be sent securely. Once in the hands of a broker or provider company, that information might end up getting sent out to a variety of different sources, including other brokers. Sometimes providers even send private information to investors. Before you know it, the client’s information is flying around the internet, and privacy is completely compromised. Organizations that deal with financial information are potential targets for identity thieves and other bad actors who become more sophisticated every day.
Medical privacy. The life settlement equation is greatly impacted by the health status of the policyholder. While a perfectly healthy individual who has a low body mass index and plays tennis three times per week may not care about medical records being shared, individuals with prior or chronic conditions don't want their information being spread around in an unsecured manner. Even sharing a list of medications that a person is taking can hinder that person's employment or their ability to secure other types of insurance coverage down the road.
At PolicyAppraisal.com, we like to say that information sharing stops with us. We take very specific information into account when making an appraisal, but we do not require a massive data dump of private information from a client. We discreetly and securely access the data that we need, and then develop our appraisal based on that information. We determine the market value of a policy based on this data, but without distributing a client's personal, private, and medical information across the internet.
While the rules for data privacy have been in place for a long time, we feel it's unnecessary to secure large volumes of personal and private information to determine whether or not a life settlement is appropriate. We have created a better way, and we would love for you to allow us to help your clients find the right value for their life insurance policy.