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As financial advisors, we know how important it is to serve our clients. Whether it’s coming up with a comprehensive investment strategy, helping them set up a trust, or guiding them into a comfortable retirement, the end goal is helping them feel secure and confident in their fiduciary health. Did you know you can sell all or a portion of a life insurance policy for more than the cash surrender value? This includes term life insurance policies as well and is called a life settlement. Here’s a breakdown of how to move forward with this plan for your clients.
Do They Qualify for a Life Settlement?
The first step of a life settlement is simply finding out if the client will qualify to sell their life insurance policy. Here at Life Settlement Advisors, we use our Qualification Calculator to help give clients a general idea of their standing. Some of the questions we ask are:
- What is the gender and age of the insured?
- What is the current health of the insured?
- What type of policy does the insured have?
- What is the cash surrender value and/or loans on the policy?
- What is the annual premium?
- What is the death benefit?
- Once we’ve received that information, we can get a much clearer picture of whether the insured will be able to sell their policy.
How Much Is a Life Settlement (My Policy) Worth?
This is a common question we get after clients have qualified for a settlement. The fact is that it can be quite varied. The first thing we look at is the life expectancy of the insured and the ongoing premium cost to keep the policy in-force. The longer the life expectancy and the more expensive the premiums are, the lower the offer will be. The insured who is dealing with a chronic medical condition and has a shorter life expectancy should expect a higher cash payout.
Selling the Policy
The institutional and private equity buyers we work with are deeply interested in purchasing life insurance policies as they provide a solid return on investment. The life insurance company will eventually pay out upon the death of the insured.
Selling a life insurance policy is a fantastic option for securing capital for your clients. Often times, these policies are superfluous or simply unneeded, and the financial gains can help in building portfolios or setting aside cash for expenses and day-to-day living. If you have any questions on the process, you can contact Life Settlement Advisors.
Life Settlement Advisors
Case Study: Larry and Betty bought life insurance when they were younger to protect their family’s future. Larry recently lost Betty to cancer. The kids are grown and the youngest is 45 years old. Larry no longer needs the coverage. Larry’s financial advisor told him he could sell all or a portion of his unwanted life insurance policy for an immediate cash payment. Larry sold his life insurance policy and used the proceeds to pay off a few medical bills and supplement his retirement.