Are You, or Someone You Know, Looking to Get Rid of a $100,000+ Life Insurance Policy?
If that’s the case, a Life Settlement may be the answer you are looking for!
What is a Life Settlement?
A Life Settlement is the sale of a Life Insurance policy to a third party for a value in excess of the policy’s cash surrender value, but less than its face value or death benefit. A policyowner receives a cash payment, while the purchaser of the policy assumes all future premium payments and receives the death benefit upon the death of the insured.
Candidates for Life Settlements are typically 65 or older and own a Life Insurance policy with a face amount in excess of $100,000.
As the Life Settlement industry continues to grow and increase presence with consumers, three key scenarios continue to lead the way in the Life Settlement market. You or someone you know, may be in one of the three scenarios as follows:
1. Underperforming UL policies or Cost of Insurance increases on a policy
Many consumers are faced with challenges when it comes to paying premiums or disappointed with expected returns on a policy they own. Dropping coverage or reducing the face value is one option, but why not explore a cash offer for the policy or what is known as a Retained Death Benefit option if continued coverage is needed. Selling the policy frees up cash for other more profitable investments. Retained Death Benefit can offer a reasonable alternative for an insured that still wants some, but not all, of the coverage that is provided by a policy. These programs offer the policy owner a reduced, retained death benefit for no continuing premiums in exchange for their Life Insurance policy.
2 Term Policies nearing their conversion deadline
From the policy holder’s standpoint, settling a Term Policy can also be a great opportunity. Term is usually bought to cover a temporary, rather than permanent Life Insurance need. When the need ends, the Life Insurance policy is usually allowed to lapse. A Term Life settlement is a great way to obtain some salvage value for a policy that would otherwise terminate without value. One thing to keep in mind for a successful Term Life settlement is that the insured typically needs to have some change in health since the original policy was issued.
3. Life Settlement for Healthy Insured
With this option buyers are looking for policies that normally get cut from the secondary market as not viable because the person is too healthy. They prefer healthy individuals ideally in their 80’s to early 90’s. In order to make an offer, a level premium illustration to age 105 and the client’s date of birth is all that is required.
Case Study
86-year-old female in standard health felt she no longer could afford a $600k policy that was purchased for estate planning purposes. Unfortunately, a rise in cost of insurance had caused premiums to accelerate on this policy and the policy had become a burden. Premiums ran 6% as a policy to death benefit ratio. Case was presented and the client was offered $130k. Client was extremely happy with the settlement on a policy that was about to be surrendered for $3k !
By keeping you informed of these life settlement options, F. Baker Advisors fulfills its fiduciary obligation, while at the same time creating a profitable alternative for all!
Feel free to reach out anytime with questions!
Call me at: 248-334-2380 or Email: Frank@fbakera.com
We are here to find the hidden opportunities that can make your retirement financially comfortable.
Frank Baker
