Your client is 70 years old, has a 2-million-dollar life insurance policy, is increasing his IRA withdrawals every year to pay the policy premiums and the client’s investment portfolio may not support the client until he dies. Sound familiar? Is there an alternative?
The answer is yes. A life settlement may be the answer to terminate the drain on the client’s IRA and provide an infusion of much needed cash to pay expenses and/or reinvest in other income producing assets. As you probably know, a life settlement is a transaction where the policy holder sells a life insurance policy to a third party for a mutually agreed upon price.
Unfortunately, life settlements are often times ignored as a viable solution for the disposition of life insurance. In fact, studies have shown that over 60% of seniors allowed their policies to lapse, viewing it as a liability as opposed to an asset.
A life settlement, as opposed to simply surrendering the policy for the policy’s cash value or worse, letting the policy lapse, is almost always a more beneficial financial option for those clients who qualify for a life settlement.
Over a 100 billion in face value of life insurance is allowed to lapse or is surrendered by individuals over the age of 65 every year. Recent studies have shown that over 90% of seniors who let their policies lapse would have considered selling their policy if they would have been aware of a life settlement as an option. The surveys also confirmed that 80 % of clients feel advisors should inform them about the life settlement option.
When a life insurance policy is no longer needed, wanted or affordable the option of selling it can maximize the asset value and minimize the client’s losses.
As a result, advisors with senior clients who own life insurance should view the policy as an asset, not a liability, and give the life insurance policy the same consideration and review as all of the client’s other assets.
Contact us today to discuss your clients’ life settlement needs!
Dan A. Penning
Life Settlements Specialist
Professional Life Settlements Plus
