Warning: include(../includes/header.php) [function.include]: failed to open stream: No such file or directory in /home/content/02/8346702/html/social/press_02132012_Hidden_Money.php on line 11

Warning: include() [function.include]: Failed opening '../includes/header.php' for inclusion (include_path='.:/usr/local/php5_3/lib/php') in /home/content/02/8346702/html/social/press_02132012_Hidden_Money.php on line 11

Betty's Corner

Warning: include(../includes/sub_nav.php) [function.include]: failed to open stream: No such file or directory in /home/content/02/8346702/html/social/press_02132012_Hidden_Money.php on line 16

Warning: include() [function.include]: Failed opening '../includes/sub_nav.php' for inclusion (include_path='.:/usr/local/php5_3/lib/php') in /home/content/02/8346702/html/social/press_02132012_Hidden_Money.php on line 16
< Back to All Articles
Warning: include(../includes/share_bar.php) [function.include]: failed to open stream: No such file or directory in /home/content/02/8346702/html/social/press_02132012_Hidden_Money.php on line 23

Warning: include() [function.include]: Failed opening '../includes/share_bar.php' for inclusion (include_path='.:/usr/local/php5_3/lib/php') in /home/content/02/8346702/html/social/press_02132012_Hidden_Money.php on line 23

Life Settlements: Hidden Money in an Old Suit Pocket

Producers eSource

Life Insurance: The Treasure in a Desk Drawer

Surprisingly, many seniors with whole, universal or convertible term life insurance policies are unaware of this untapped asset in their possession. You could help them plan to sell the policies to a life settlement provider at the right moment for a substantial percentage of the policy’s face value. Unlike investments that have shrunk or disappeared, their policy retains its value. Rather than keep the policy to maturity or let it lapse, you could help senior policyholders convert it to cash.

Among the findings of a January 2012 survey of 365 adults from ages 55 to 65 by International Communications Research (ICR) for The Lifeline Program:

  • 55% of Baby Boomers are concerned they will have to work past the age of 65.
  • 29% would consider selling a life insurance policy for a portion of the face value to fund their retirement.
  • 79% felt financial planners and insurance professionals should be informing policyholders about life settlements as a financial option.
  • 76% say people over 65 years old should have life insurance

What’s Your Client’s Financial Strategy?

The implications of the research on your role as a life insurance or retirement planning professional are profound. Here’s some guidance we are calling “50/60/70.”

  • 50s. Aside from the amount of life insurance coverage, people in their 50s should be carefully anticipating when their policies will mature. If coverage will expire before age 70, they should consider buying the cheapest possible convertible term policy that will get them to age 70. Don’t worry that it is not a permanent policy as it can be converted later and sold as a life settlement.
  • 60s. Policyholders in their 60s should review if the initial reasons to purchase the policies still exist. Spouse death or divorce often changes the need for protection or grown children lessen the need for insurance coverage. The challenge is to keep insurance in force into their 70s while preserving the policy’s value as a saleable cash asset. People this age in failing health may opt to appraise their insurance coverage immediately with a life settlement provider.
  • 70s. Elderly policyholders in their 70s or 80s often contemplate letting life insurance policies lapse or not renewing because of huge premium increases. This is precisely when they should be actively evaluating life settlement providers and weighing the relative benefits and optimal timing of selling while their in-force policies are a liquid asset.

Each client retirement strategy is an opportunity for you to offer a unique late-life solution that includes commissionable life settlement conversion of a mature policy plus the opportunity to write new, short term coverage.

Life Settlements Come of Age with Boomers

These strategies have all been made possible over the last two decades with the rise of life settlements. Investment groups are increasingly willing to purchase whole, universal and converted term life insurance policies from their owners for an actuarially determined cash value, a percentage of the policy’s face value. The owners receive an immediate cash settlement and the investors assume premium payments and receive the policy’s full face value at the time of eventual death.

The January ICR survey demonstrated that life settlements are coming of age in the United States. Over the next 20 years, millions of baby boomers, the largest single population surge in the country’s history, reach retirement age. A majority will need cash to help fund their retirement, yet they remain relatively unfamiliar with the life settlements process and feel you, as their financial counselors and insurance representatives, should be providing more information.

As an educated agent – regardless of the life insurers you represent – you are able to discuss each policyholder’s personal background and future financial needs in confidence. Prospective applicants are typically elderly, carrying life policies of more than $250,000. To initiate the process you submit a confidential request on their behalf and receive a formal offer from a provider stating the amount proffered and detailing all applicable conditions. The life settlement process is completed if, after analyzing the offer, the policyholder elects to sell the policy.

The ICR survey results underscore just how much the financial and retirement paradigm has changed for everyone in the U.S. over the past decade. In the turbulent environment of risks, yields, rewards and security, life insurance once again merits full evaluation within a person’s portfolio.

It’s like finding thousands of dollars in an old suit pocket. Life settlements can be an unexpected surprise in the new retirement plans of today and tomorrow. Unlike yesterday’s preferred retirement portfolios of stocks, bonds, CDs, gold, 401K, and real estate—it may just be dull old life insurance that provides baby boomers with the cash value and yields to live out their retirement. With inadequate savings and investments, buffeted by the economy these past years, many 60-somethings find themselves financially unprepared, cash strapped with no alternative other than to keep working. And that’s where you come in.

Warning: include(../includes/footer.php) [function.include]: failed to open stream: No such file or directory in /home/content/02/8346702/html/social/press_02132012_Hidden_Money.php on line 76

Warning: include() [function.include]: Failed opening '../includes/footer.php' for inclusion (include_path='.:/usr/local/php5_3/lib/php') in /home/content/02/8346702/html/social/press_02132012_Hidden_Money.php on line 76