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March 01, 2008 at 07:00 PM
By its very nature, term life insurance is extremely affordable, mostly because the possibility of a death benefit payout is more limited than with other policies. Many consumers still view term life coverage as more or less disposable — that is, they purchased a term policy to provide coverage, such as income protection, knowing that the policy was set to expire at a specified time.
In fact, far too many insurance and financial professionals agree with the supposition that term insurance might as well be lapsed as soon as the initial need for the coverage passes.
Other advisors, however, are learning that there is no reason to lapse a term policy.
In the increasingly robust life settlement arena, term policies represent a significant portion of the market. That should be no surprise, given that more than $1 trillion in new term policies is issued annually. Add to that the fact that the vast majority of term policies never pay a benefit, and you can see the opportunity for smart consumers and their advisors.
Just within your existing book of business, there are likely a number of term-to-life settlement scenarios waiting for you. Many of these will be individuals who would appreciate knowing that their investment in a policy is not for nothing. If they are nearing the end of the term and no longer need the policy, you can facilitate a life settlement and help them realize a benefit — in other words, a cash settlement — where they thought there was none.
Or perhaps they will need further coverage. In that case, you can help them by not only transacting a life settlement on their current term policy, but by helping them to re-invest the proceeds in a newer, better performing term policy, or even in a permanent policy. As you may know, settlement proceeds can be used for any purpose.
