Did you know you can sell all or a portion of a life insurance policy, even term insurance?
(4 minute read)
As a financial advisor, you want to be sure you’re offering senior clients the absolute best in wealth management and retirement planning. This isn’t about a single investment or product; it’s a process of analyzing their assets, understanding their retirement goals, and carefully crafting a strategy that makes the most sense for them. That’s exactly why your older clients trust you, because they know you have their best interests at heart.
But, it’s also a very personal process. So, when you decide to suggest the idea of selling all or part of a life insurance policy, it’s understandable that you may need a review of the best way to talk about this opportunity. At Life Settlement Advisors, we too share this dedication to providing the best and most honest service to our clients in the process of a life settlement. With that in mind, here are some tips on how to talk to your clients about selling a life insurance policy.
#1: Make it Personal
When you introduce the concept of selling a life insurance policy, it’s important to have a thorough understanding of what life insurance plans they have, the premiums they’re paying, and what options they have to move forward.
Some policies are preferable when selling them, such as:
- Convertible Life
- Variable Universal
- Whole Life
- Term life – that is convertible
Each portfolio tells a unique story, and that level of personalization means different potential outcomes in the benefits, drawbacks, and potential return of a life settlement. For example, you might suggest one client opt for a viatical settlement, while another surrender their policy, and a third not go through with the process at all. Again, each client has their own needs and goals for retirement, so understand that this is not necessarily a one-size-fits-all situation.
#2: Walk Them Through the Process of Selling a Policy
For many clients, the concept of selling a policy can be brand-new to them. In order to help give them a better understanding of how the process works, it’s vital that you’re able to walk them through what to expect with selling their life insurance policy.
When agreeing to selling a life insurance policy, clients will need to fill out applications regarding their current policy, as well as a HIPPA-covered questionnaire about their health, and any related financial documents such as a copy of relevant trust (if the policy is owned through a trust).
From there, the application is sent to a trusted life settlement partner like LSA, reviewed by a licensed underwriter, and then sent to potential buyers for bids. This process takes a minimum of 90 days, and potentially longer if there are any delays in receiving the required information.
Preparing the client’s expectations for who’s involved in selling a policy, as well as the steps and usual waiting period, can help to make this concept seem less abstract.
#3: Explain the Benefits of Liquefying Assets
Selling a life insurance policy is more than a lump sum of cash; it’s a life-changing opportunity that can provide funding for all kinds of life and retirement goals. This is a process of creating liquid assets out of a policy that, to this point, may only be costing them money. This can be due to several reasons:
- The premiums have gotten too high
- They no longer need it, or don’t have a spouse or children who are depending on the policy payout
- They have a term policy that is approaching an expiration date, which can be converted to permanent life insurance and then sold for a cash settlement
- The insured needs cash
Providing this opportunity for liquidity is a massive benefit for your clients. There are truly unlimited applications for a payout, including paying off medical bills, checking off a “bucket list” experience, paying for a new vehicle or home, or just supplementing retirement savings. This is another chance to personalize the process and help your client understand what a cash settlement could do to change their lives.
#4: Consider the Language of Selling a Life Insurance Policy
Discussing life insurance policies and payouts in case of death can be a heavy, personal subject. While you may have done a great job expressing the benefits of selling a policy, it’s important to use the right language to discuss these topics, as well as handle the conversations with tact and care.
When discussing these transactions, you may consider:
- Referring to the process as “selling a life insurance policy” as opposed to “life settlement.” Not only is it a less colloquial term, it also is just a more accurate description.
- Talk about how selling these policies is highly regulated in nearly every state, covering sellers, buyers, and brokers.
- Detail the transparency of the process, and if possible, introduce them to the broker or partner that will be working with you on this settlement.
- Remember how providing this liquid asset opportunity fulfills any of your fiduciary duties.
Selling a policy can be a hugely impactful and overwhelmingly positive experience, especially if you choose the right partner to help with the settlement process. That’s where Life Settlement Advisors comes in. For decades, we have remained focused and committed to providing our clients with best-in-class service and guidance for selling these policies. If you’re ready to start talking to your clients about selling an unwanted or unneeded life insurance policy, contact us today.
Did you know you can sell all or a portion of a life insurance policy, even term insurance? Selling an unwanted life insurance policy is no different than selling your car, home or any other valuable asset that will create immediate cash. Contact us today to learn more.
Life Settlement Advisors