New Survey Finds Most Financial Advisors Don't Understand Life Settlements

By a News Reporter-Staff News Editor at Insurance Weekly News -- Following a detailed research project held in conjunction with Penton's WealthManagement.com, the Lifeline Program recently released a white paper, The Real Story About Life Settlements, which illustrates that a vast majority of financial advisors do not understand life settlements.

The Lifeline Program and WealthManagement.com recently surveyed financial advisors about life settlements, and more than 40% of respondents were either unfamiliar or had only "heard of" life settlements. While nearly half of respondents were aware of life settlements, only 11% had either recommended a life settlement or assisted a client with a transaction.

"The overall results surprised us, but we also discovered a significant disconnect in the mindset of many advisors," said Wm. Scott Page, president and CEO of the Lifeline Program. "Many financial advisors are seeking-out liquidity events, or 'money in motion,' for their clients but few have realized that life settlements create an actionable liquidity event." 

The survey found that 70% of advisors actively look for liquidity events as part of their marketing strategy.

The survey found that 70% of advisors actively look for liquidity events as part of their marketing strategy. Yet this group has failed to capitalize on an opportunity to put money in motion using life settlements, as only 18% of those surveyed cited life settlements as a strategy to provide clients with revenue for new investment opportunities.

Nearly half of advisors surveyed believe that clients who plan to let coverage lapse should consider selling their life insurance policy. The same proportion of advisors also said life settlements are a viable option for clients with unneeded or unwanted life insurance. Financial advisors are also largely unaware of the life settlement regulatory environment as more than 80% admitted that they didn't understand that the transactions are safe and monitored under the umbrella of state insurance commissioners. The survey also found that many advisors still believe that life settlements are only for the terminally ill, and others believe the transactions are "morbid" and "creepy."

"We are still combatting misconceptions which first appeared more than 20 years ago," said Stephen E. Terrell, executive vice president of The Lifeline Program. "We now have a better understanding of the market and that we have to keep educating advisors that life settlements can help their clients and create liquidity events."

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