Term Life Settlements
Term life insurance is a great option for coverage when there’s a need for it. However, those needs don’t always last over time. When that need goes away, your clients may find themselves with a non-convertible term policy they can’t easily get rid of. Because term policies don’t build equity, they don’t offer your clients any return on their investment.
There’s a great option that often goes underutilized with term policies that can help your client get a return from a term policy they no longer need. When purchasing the policy, buyers usually have the option to add a rider that can convert the term to permanent for the life of the policy. This often comes with a small addition to the monthly premium, but it opens up a wide variety of options for when the client no longer needs the term policy.
Once the policy is converted, your client has a couple of options: 1) keep the policy, or 2) sell it in a life settlement. If the policy is sold in a life settlement, it provides liquidity for alternative investments that can better fit the current needs of your client.
It’s not uncommon for advisors to overlook the rider as they review their clients’ finances, but it is an important addition that can provide many alternatives for the future.
If you have a client with a convertible term life insurance policy, use our qualification calculator to see if they qualify for a life settlement.