Life Settlement

Oct 15
09:36

2007

Nick Baldwin

Nick Baldwin

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Life settlements are a new way for you and your client to look at a life insurance policy. Some can be transformed into an unexpected source of income, freedom and flexibility.

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Recently you may have been hearing more and more about life settlements and wondering what are they? Life settlements are a new way for you and your client to look at a life insurance policy. Some can be transformed into an unexpected source of income,Life Settlement Articles freedom and flexibility, all for your enjoyment, while your clients are still alive. A vibrant secondary market for life insurance policies is populated by major institutional investors searching for diversification of investment options has come into being. That means that hitting in your client’s safe department box or bottom drawer may be an undervalued asset.

 

Life settlements are relatively new to the life insurance marketplace. Until recently policy owners of unwanted coverage had limited alternatives: they let policies laps or surrender them for cash value. But now the insurance carrier no longer holds sole control over the options clients have with their life insurance policies. Clients may now be able to sell their policy in the secondary market for far more than the cash surrender value the life insurance carrier would offer. Life settlement empowers policy owners to view life insurance as an asset rather than an as an expense. When a life settlement is used policy owners receive market value for their life insurance policies and no longer have an on going premium commitment. As such, life insurance has become an important financial tool for managing investment portfolios.

 

Who is a candidate for a life settlement?

Not everyone should sell their life insurance policy, but it is a good idea for agents to help their older clients evaluate a life settlement as part of wealth management strategy. Life insurance is a valuable product and serves an important role in one’s financial portfolio. Often times, however, people’s needs and circumstances change, while policies don’t. For those who no longer want to maintain coverage or for whom premiums have become burdensome, life settlement may provide substantial benefits.

 

When the policy is no longer needed the life settlement marketplace offers an important alternative to cashing in or letting a policy laps. Outlined in this article are the situations that may create an opportunity to reconsider the necessity of a life insurance policy:

 

  • A safety net is no longer needed due to lifetime wealth accumulation, the maturity of children or other reasons
  • The policy owner is over insured or wishes to dispose of the existing policy in order to execute a more appropriate one
  • Tax law changes have reduced the needs to subsidize state taxes
  • A family or a medical emergency arises
  • Insurance policy premiums have become unaffordable
  • Business loan secured by the policy has been repaid
  • Stock market volatility has diminished retirement income
  • A need exists to find a long term care program

 

The ideal life settlement candidate is a person over age 65 who no longer requires a death benefit of a life insurance policy. In fact, those who choose life settlement are usually individuals whose ability has brought them a certain degree of affluence. But any policy holder including individuals, corporations, charities or trusts may sell any life insurance policy including group and term policies. Policies are sold to qualified buyers for the present value of the death benefit. The buyer maintains the policy paying premiums and eventually collecting death benefit.

 

In general, life settlement is a new way to interpret life insurance. It is also a way to cut expenses or to improve you investment portfolio and start enjoying life right away.