Case Studies
Case Study: Term Life
Mr. Bates was a 74-year old widower with a $500,000 term policy and a cash surrender value of $0. His current annual premiums were $12,500. Since there was no longer a need for the policy, his advisor suggested that rather than letting it lapse and receive nothing, he explore a life settlement as an alternative.
A life settlement expert was able to solicit multiple bids from a variety of institutional funders around the world. Within two months, Mr. Chambers accepted a top offer of $114,500 for the policy. Upon receipt of the payout, Mr. Chambers promptly placed the cash into his grandson's college fund.
Case Study: Whole Life
Ms. Williams' marketing agency was still making high premium payments on her retired partner's $3.5 million policy. There were loans secured by the policy of $500,000 with the net death benefit being $3 million after deducting the loans.
Since the policy was now outdated and the premiums were a liability, she considered cashing in the policy for its cash surrender value of $850,000. Instead, her company's CPA suggested that she utilize a life settlement broker to sell the policy on the secondary market.
The policy fetched a price of over $1.3 million on the secondary market, which yielded $550,000 more than the cash surrender value.
Case Study: Joint Life Survivorship
Mr. and Mrs. Chambers held a $1.4 million joint survivorship policy that matured at age 95. The policy was not performing and the premiums were due to increase from $16,000 per year to $24,000.
Because of their age (75 and 76, respectively) and other qualifying factors, their life insurance agent realized that a life settlement would be a viable option. Their policy was sold on the secondary market for a total of $175,000. The proceeds from the sale were used to purchase a new joint life survivorship policy with a lifetime maturity and contractual annual premiums of $14,000.
In the end, Mr. and Ms. Chambers were able to obtain a better, locked-in insurance contract while reducing their premiums by almost $13,000 per year.