Ask the Expert: What attracts people to sell their policies?
Question: What types of situations are triggering consumer interest in life settlements today, compared to two years ago? Are you seeing a trend that would help me address my clients’ needs?
What remains true of consumers seeking a life settlement today versus two years ago is that consumers continue to act in response to changing needs. Two years ago, one of the most common transactions was replacing existing policies with a more efficient policy and increased death benefits. Today, consumers are acting in response to economic challenges and rightsizing insurance coverage. Typically, we see that capital market and real estate pressures have reduced estate valuations and the corresponding estimated estate tax burden. In this environment, reevaluating estate planning often reveals excess insurance coverage for which a settlement can be considered. Similarly, business environment pressures have led companies to monetize assets such as legacy key person insurance. And finally, as personal circumstances have changed for some individuals, life settlements are sought for relief of premium burden.
The ever-present trend affecting settlement clients remains changing needs. For a client over 70 years old whose health underwriting has changed since policy issuance, a life settlement may be an alternative to lapsing or surrendering an unwanted or unneeded policy. A qualified life settlement broker will help evaluate whether or not a life settlement is an option for individual clients based on their individual case profiles.