In some cases, the cash proceeds can reach 60-80% of the face value of the policy. Obviously, it is in the interest of the policy owner that officers at least explore the option with them.
It is also important to note that term insurance policies, if convertible, may be eligible for a life settlement.
Retired business owner sells $2 million term policy for $600,000
We recently negotiated a life settlement transaction for an agent whose client had a key person term policy that became obsolete when he retired. Paying premiums was becoming a burden and the client was looking for an escape route.
After conducting a thorough review of his client’s needs for life insurance coverage, the agent recommended that he convert and sell the policy in the secondary market.
We were brought in to negotiate the transaction and submitted the file to 17 potential buyers.
We successfully generated competitive bids from seven institutional funding sources ranging from $180,000 to $600,000. The client and his family were stunned to receive such a windfall for a policy they thought had no value.
Opportunity for insurance advisors
The current economic climate presents an opportunity for insurance professionals to play a leadership role in helping senior customers make informed choices that are in their best interest.
Reach out to other professionals in your referral network (e.g. financial planners, CPAs, estate attorneys, bank trustees, etc.) and offer to provide your professional expertise regarding the growing market for insurance settlements -life and the ability for customers to monetize life insurance policies that have become marginally beneficial.
Consider sharing with your older clients and professional referral sources our collection of life settlement success stories that clearly illustrate the financial benefits of selling excess or unwanted life insurance coverage, especially policies that are about to expire or redeem.
Take away food
Today, as older people begin to feel the effects of rising inflation and look for ways to reduce their expenses, more policies are at risk of being cancelled.
Selling an unwanted policy in the secondary market can help seniors recoup some of their insurance investment and can often provide an unexpected financial windfall for their retirement.
When the decision is made to explore a life settlement, be sure to work with an experienced life settlement broker who will negotiate with multiple secondary market buyers to obtain the highest possible offer.
Life insurance settlement brokers, including Asset Life Settlements, have a fiduciary duty to represent the best interests of the seller of the policy, not the buyer.
A good broker should be able to provide immediate price analysis. Our firm, for example, offers an online price calculator.
Jeff Hallman and Scott Thomas are co-founders and managing partners of Asset Life Settlements, a life settlement brokerage firm based in Orlando, Florida. Hallman can be reached at (888) 335-4769, ext. 1108, and Thomas can be reached at (888) 335-4769, ext. 1115.]