Who Can Help Seniors Sell A Life Insurance Policy?

Did you know you can sell all or a portion of a life insurance policy, even term insurance?

(2 minute read)

Selling a life insurance policy is a strategy that can help people gain liquidity and reduce monthly expenses at the same time. This simple fiduciary service can help your clients make the most of their life insurance policy while also relieving them of the premium costs. And, it takes a lot less work than you might think.

It may shock you to learn that more than $100 billion in life insurance is allowed to lapse or be surrendered by Americans over age 65 every year. This represents a major waste in assets. After years paying premiums for a life insurance policy, these investors are forced to miss out on the benefit of their investment. Policies might lapse or be surrendered because the premium has become too expensive, or because the coverage is no longer needed due to life changes in retirement.

Regardless, there is another option—selling the life insurance policy. This is a process many financial professionals feel unsure about. Such uncertainty leads to both the retiree and their trusted advisor missing out on income that could make a difference. Here’s what you need to know to help clients make the most of life insurance policies, or even a portion of the policy.

Who Can Facilitate Selling a Life Insurance Policy?

There are many types of financial or legal professionals who could help a client sell their unwanted or unneeded life insurance policy. Here are a few of the trusted advisors we work with the most:

Certified Professional Accountants (CPAs) see their clients’ financial situations and can predict when additional liquidity might be needed or wanted.

Licensed Wealth Managers can help clients understand if a life insurance policy is still needed, or still affordable.

Trust Officers will understand when a different type of policy or different size of policy is needed for a trust to meet its objectives.

Life Insurance Professionals consult with clients when life changes mean policies might not be needed or wanted.

Estate and Elder law Attorneys help clients plan through changing goals and will notice when a policy becomes obsolete or a drain on the estate’s resources.

Some of these professionals are legally required to act as fiduciaries for their clients, while others choose to advise clients in their best interest. Clients need to be educated about all their opportunities to make money from their assets. Selling a life insurance policy is a regulated and safe transaction that brings many benefits to advisors and the people they serve.

Cash surrender values average just 4% of a policy’s face value, while selling a life insurance policy averages anywhere from 25-30% of the face value. A majority of clients who allow policies to lapse or be surrendered might choose a life settlement if they knew about the option. This would lead to more money for both the client and the advisor who facilitates the transaction.

How Do I Facilitate a Life Settlement?

Not only does selling life insurance result in more value for the policyholder, it’s a very simple process for any of these trusted advisors. After talking with your client about the option, the most work you might have to do is get an illustration from the life insurance company. Otherwise, the life settlement company handles the rest, from finding a buyer for the policy to the documentation and compliance activities necessary to keep everyone protected.

You don’t have to be an insurance professional to understand that selling a life insurance policy is a great option for many individuals. While this transaction may not be ideal for everyone, it’s one more option for financial professionals to serve their clients in life-changing ways by turning an expense into a liquidity event.

I invite you to learn more about life settlements and learn information to share with clients by attending our webinar on October 20. I hope to see you there and answer any questions you have about who benefits most from these transactions, the process of selling life insurance, and any other information you need.

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.

Leo LaGrotte
Life Settlement Advisors
llagrotte@lsa-llc.com
1-888-849-0887

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