Vibrant 2018 Outlook for Life Settlements Catalyzed by 4 Tax Reform Provisions

Vibrant 2018 Outlook for Life Settlements Catalyzed by 4 Tax Reform Provisions

We’re all now aware that recent tax reform law is the first major tax overhaul since 1986 when Ronald Reagan was President. Noteworthy provisions: the standard deduction has doubled, tax rates are lowered and fewer people deal with the alternative minimum tax. None of this will likely affect 2017 taxes. However, four less-publicized tax reform elements will encourage life settlement growth in an already robust environment.

  1. Taxes on a life settlement will reduce.
    The new law simplifies and reduces taxes by allowing all premiums paid to be included as the cost basis. The previously unfavorable 2009-13 ruling required sellers to remove the cost of insurance (COI) from their premiums when calculating the cost basis. This not only increased tax due, but also made it very difficult to determine a policy’s COI.
  2. A great majority of Americans are exempt from estate tax.
    Before tax reform, few estates were subject to the estate tax, which applies to the transfer of property after someone dies. Now, even fewer people have to deal with it. The amount of money exempt from the tax — previously set at $5.49 million for individuals, and at $10.98 million for married couples — has been doubled. Now less than 0.1% of all estates are expected to be subject to estate tax.
  3. There’s a new tax credit for non-child dependents, like elderly parents.
    Taxpayers may now claim a $500 temporary credit for non-child dependents. This can apply to a number of people adults support, such as elderly parents.
  4. More medical expenses can be deducted. 
    For the next two years, filers can deduct medical expenses that add up to more than 7.5% of adjusted gross income. In the past, the threshold for most Americans was 10% of adjusted gross income.


A life settlement is the sale of a life insurance policy for a value in excess of the policy’s cash surrender value, but less than its face value, or death benefit. A policy owner receives a cash payment, while the purchaser of the policy assumes all future premium payments and receives the death benefit upon the death of the insured. According to the Life Insurance Settlement Association (LISA), “An astounding $100 billion+ in face value of life insurance is lapsed or voluntarily surrendered each year by seniors over the age of 65.”

Obviously, paying less tax on a settlement will make it more attractive under the new tax reform, but we expect the other elements mentioned to also encourage policy owners and their advisors to actively consider life settlement options.

With respect to the estate tax exemption, many policy owners now recognize their modest estate no longer requires the tax planning provisions offered by their life insurance policy. For caregivers, the tax credit is likely to encourage more financial understanding of their elderly parents’ finances and the options life settlement affords them. Lastly, more medical deductions may incur more medical expenses which are often paid from proceeds of a life settlement.

Magna believes there is a tremendous opportunity to increase awareness, especially in light of the recent tax reform law increasing the federal estate tax exemption, which may eliminate the need for many policies purchased as an estate planning tool. In those cases, a life settlement may be a reasonable financial planning option. Try our Magna Life Settlement calculator to see if a life settlement is an option for you or your client.

David Serra, President of Magna Life Settlements said of the reform, “Policy owners are rapidly recognizing life settlements as a compelling alternative to surrendering unwanted life insurance policies. Now more than ever, there is a tremendous opportunity to increase awareness so that the potential untapped value of an unneeded life insurance policy can be maximized, especially in light of the recent tax reform law.”

About Magna Life Settlements and Vida Capital Management

Magna Life Settlements has been active in the life settlement industry since 2004 and was acquired by Vida Capital Inc. in 2010. Headquartered in Austin, TX, Vida Capital is an institutional asset manager with over $2.6 billion of assets under management focused exclusively on providing longevity-contingent investment solutions to institutions and individual investors. Vida specializes in the structuring, servicing, financing, and management of life settlements, synthetic products, annuities, notes, and structured settlements. Vida’s senior management team has over 100 years of life settlements and life insurance experience and extensive knowledge of alternative investing. For more information, please visit

Happy 2018,
Clay Gibson, Managing Director, Policy Origination

Magna Announces Key Hires and Promotions

AUSTIN, TX  JANUARY 5, 2018 – Magna Life Settlements, a multi-billion dollar originator of life settlements, announces the promotion of industry veteran Clay Gibson to Senior Vice President, Origination and the hiring of Scott Harris as Chief Marketing Officer. Along with the key hires and promotions, the company is expanding its space and moving to downtown Austin.

Clay and Scott will report to Dave Serra, President of Magna Life Settlements (“Magna”), a wholly owned subsidiary of Vida Capital Inc.

Dave Serra, Senior Managing Director, said of the key hires, “We are excited to announce these new hires and promotions which will improve our focus and execution in both the secondary and direct markets to best serve the rigorous expectations of our policy owners.”

Clay will manage all secondary policy acquisitions from direct and indirect sources for Magna.

Scott Harris comes to Magna as Chief Marketing Officer. With 20+ years of experience, Scott was Co-Founder/CEO of Social Factor. Scott previously served in marketing leadership with Premiere Global Services, Dell, Austin Ventures, and Merck. At Vida, Scott’s primary focus will be on developing materials and programs to increase awareness and educate policy owners and influencers of the potential benefits of accessing the life settlement market. He has a BS in Engineering and an MBA from The University of Texas at Austin.

Magna believes there is a tremendous opportunity to increase awareness, especially in light of the recent tax reform law which raised the amount to be excluded from the federal estate tax, of policy owners who previously used insurance as an estate planning tool.

Jeff Serra, Vida Founder and CEO added, “Policy owners are rapidly recognizing life settlements as a compelling alternative to surrendering unwanted life insurance policies. For almost a decade, Magna has led the market in offering a fair market value to policy owners in every state while also delivering compelling returns to investors. With our new team members and changing responsibilities for  our most experienced employees we hope to continue to serve the needs of our growing list of constituents.”


Dan Young Speaks At 1st Annual Life Settlements Investor’s Symposium

Dan Young, Vice President of Portfolio Management at Vida Capital, spoke at 1st Annual Life Settlements Investor’s Symposium, on Friday, September 18, 2015 in Miami, FL. The panel entitled Market Overview: Higher Yields, Uncorrelated Risk, discussed such topics as investor yields in today’s marketplace, current demand/supply dynamics, where the market is headed, as well as the potential involvement of the structured finance community in the life settlement market. Vida Capital (parent company of Magna Life Settlements) was a sponsor of the Symposium.

The Symposium is run in tandem with ABS East 2015, one of the most important industry conferences focused on the ABS market.


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