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Many advisors hesitate to share the news about life settlement opportunities with their clients because it doesn’t always seem like a natural fit. Selling a life insurance policy to a third party for a lump sum of cash may not be the right choice for every senior client, but there are three kinds of people who often benefit from exactly this decision. If any of these sound like people you know, here’s why they might make the right choice in selling a life insurance policy.
The Retirement Butterfly
Some older clients reach retirement age and find themselves in a second youth. For these people, assets like a home, a car, or a life insurance policy may become irrelevant as they transform into a new individual with new financial goals and plans. Clients who are making big changes in their habits, like moving to be closer to grandkids or planning their trip around the world, can often benefit from selling a life insurance policy and getting back some of the dollars they’ve invested earlier in life to pay the expenses of their new adventure.
Other clients reach retirement age and find they want consistency, not change, but that doesn’t mean everything stays the same. Depending on how much a client saved for retirement during their career, they may find that a monthly expense like a high life insurance premium payment becomes unmanageable on a reduced income. As these clients continue aging, they may benefit from a life settlement because it allows them to spend less on the policy while getting a return on investment that is higher than surrendering the policy to the insurer.
Lastly, some clients in their 60’s and older find they have more life insurance coverage than they continue to need as their debt gets smaller or they downsize a home. In those cases, it may be in their best long-term interest to liquidate one or more unneeded policies and invest that cash in something that brings higher returns. They got adequate coverage when it was needed, so clearly they want to be prepared for anything. But that also means making the most of a savings and investment strategy now to ensure short-term financial needs will be met tomorrow.
These three types of client aren’t the only ones who can benefit from a life settlement, but we do encounter each of them pretty often, and we’re happy to say we can often help them. If you’re curious about whether you or a client qualify for a life settlement, check out our free calculator, or contact us for more information.
CASE STUDY: Harry, turned 76 last January and is unsure what to do with his $350,000 universal life insurance policy. Harry purchased the policy to fund the kids’ college, pay off the balance on the mortgage on the home and provide replacement income to his wife in case he passed away unexpectedly. Today the kids have graduated from college and the mortgage has been paid off.
Harry no longer needed the $350,000 in death benefit, although Harry’s wife wanted to keep some insurance on Harry. They sold $300,000 of Harry’s $350,000 policy; thus, retaining $50,000 for his wife and receiving $45,000 in an immediate cash payment.
Life Settlement Advisors