7 Reasons to Pursue a Life Settlement for Your Client:
At ILS, advisors often ask us why clients might seek to pursue a life settlement. The reality is that there are several reasons why a policyholder may seek options other than maintaining their coverage. We already recommend that policyholders and advisors work together to weigh the pros and cons of a life settlement, but here are a few different reasons where we have found life settlements tend to make the most sense:
1. Coverage is no longer needed
Often, clients will seek to get insurance to provide financial solvency in the event of unforeseen circumstances. A policy owner may get coverage to assist in paying off a mortgage, paying for someone’s schooling, or any other number of reasons. The reality for some individuals is that situations change, and maybe that home is paid off, schooling has been completed, or their children are now well-established in their careers. If your client’s needs for insurance have changed, it may make sense to speak with one of our experts to determine if a life settlement is a viable option for their policy.
2. Coverage is no longer affordable
Occasionally, a policyholder may have had a change in their financial position since their insurance policy was issued, and now the weight of the recurrent premium may feel like too large of a financial burden. There are also instances where an insured may have replaced a small to mid-size policy with a larger policy as their estate has grown, and they are looking to prune existing coverage from their portfolio. In either case, a life settlement might make sense to discuss.
3. Desire to eliminate future premium burden
One of the most common reasons that we encounter for a life settlement is that policyholders are no longer interested in spending the money necessary to maintain their life insurance coverage. Each year, more than $100 billion dollars of policies insuring seniors over the age of 65 lapses. ILS is here to assist in determining what options might exist as alternatives to surrendering or canceling the policy.
4. Desire to deploy capital elsewhere
Especially in the market volatility of 2022, consumers may have an increased desire to look at re-allocating resources across their portfolio. As you sit with policyholders to review their assets, taking measures to increase liquidity that is available to deploy could be beneficial. One of the greatest liquidity events a senior may experience is a life settlement. If you think that it might make sense to seek liquidity for your client via a life settlement, please contact our team!
5. Key-man coverage is no longer needed
Key-man insurance is oftentimes a significant piece of a firm’s operational plan. As firms grow, they may find that executive coverage is no longer needed, or an executive may make the decision to step away from full-time employment into either a part-time consulting role, board seat, or retirement. No matter the reason, if key-man coverage is no longer needed, a life settlement can be a great resource for all parties to pursue as a means of recouping a portion of the sunk-cost. To take the first step in learning about the benefits a life settlement can provide in the context of key-man insurance, visit our life settlement qualifier.
6. Desire to increase nest egg
Policyowners will often seek a life settlement as a means of providing a significant influx of capital to their nest egg. This can provide the opportunity for the policyowner to have a better financial cushion in order to retire earlier in life. To get a quote for your client’s policy, visit our life settlement qualifier.
7. Estate goals changed
Perhaps your client is in a financial position where the estate tax is, or has been, a key variable in their financial plan. As the value of estates ebb and flow, coverage desired for the estate can also vary significantly. Estates may grow or shrink to a point where the concerns surrounding estate tax at coverage issuance are no longer a variable in their overall plan. If you are interested in learning how a life settlement may make sense for clients within the context of the estate tax, please visit this link to schedule time with our team of experts!
To learn more about the benefits your client might be able to unlock from a life insurance policy, please use our qualifier or schedule time with our team.