There are a number of statistics affecting today’s boomers, and it’s likely you’ve heard at least a few of these:
- About 15% of today’s baby boomers have a traditional pension plan (TIME Magazine)
- The Alliance for Investor Education states that half of retiring Americans have less than $2,000 saved
- 40% of Americans plan to “work until they drop” (AARP)
In addition, more Americans will need long term care services, and due to divorce, smaller families and tight budgets, many children are taking over the reins of their parents’ personal and financial needs. While this certainly has obvious implications for the healthcare field, it also has important ramifications for life settlements.
As more children take control of their parent’s finances, these adult children face a variety of challenges. Typically working themselves, they are faced with working double shifts through their employment and the care of their aging parents. They may also be losing their savings in order to pay for in-home care. This article details a few things you need to know about this population and how you can make a life settlement sale directed to them and their needs.
To start, here are some important facts you should know about this market:
1. They are willing to talk options.
Adult children with families of their own, particularly where both parents work, are extremely familiar with juggling schedules, decisions and sacrifices. When faced with aging parents needing special care (even if it’s just management of their finances), these children feel constrained, as though they have no options but to either tap through their parent’s savings or their own.
Just the fact that these families face challenges and additional burdens gives you the foot in the door to talk possibilities. Instead of feeling overwhelmed and unfamiliar with what choices, if any, they have available, a conversation about a life settlement can be the welcome news they’ve been hoping for. Now is a critical time to get that foot in the door to offer solutions to the clients who need it. The aging popular may be unable or unwilling to initiate that conversation, or they may not even be aware that they have any options. Reaching out to the children provides a warm introduction to those parents.
2. Talking to your clients’ children builds your client base.
Isn’t part of this business built on the strength of referrals? Extending your introduction and conversation to the adult children broadens your network and contacts and provides even greater chances of referrals. Adult children caring for aging parents are friends with other adult children in similar situations, which can only help you grow your business. Busy people are looking for simple solutions, and your ability to step in at the right time to provide that will often result in referrals.
3. Your clients’ adult children may be unaware that a policy exists.
A conversation about old life insurance policies can inspire parents and children to have a conversation about existing documents and the need for generating new coverage. This is important for estate and financial planning. Having this discussion within families tends to lead to greater preparedness and understanding about options for the future. Being the advisor that generates this discussion for families could be very fruitful for you.
If children are managing the finances and are unaware of the policy existence, the chances that it will eventually lapse due to non-payment are high. In fact, even if children are aware of the policy, they might initially see the benefit in lapsing or cancelling the policy to save on premium in the short term. Start a conversation about how much more beneficial a life settlement offer can be and cement your role as the trusted advisor.
4. Life settlements can be a good way to resolve business needs.
If the aging parent has had to step aside in a family business to tend to medical issues, there may be a cash flow situation putting the company in peril. Many family members are often hesitant to talk about any options that result in the loss of a business developed by parents. If there’s a cash value policy in play (particularly if it was purchased for business needs), there’s value in using a life settlement for the policy to strengthen the business in the short term, or at least stall for a few months to give family the time to evaluate options. Perhaps the family no longer has the need for the business policy, which will help increase cash flow in the short term and allow the funding for new plans or personal health care.
5. Life settlements allow for patient care and continued life.
Many adult children have stepped in to provide the care needed for these parents, but this is at the peril of their own employment and puts additional stress on their own family relationships. A lump sum with the opportunity to use those funds for home care of a family member gives the flexibility and peace of mind moving forward. Without the financial assistance of this lump sum, many families find it difficult, if not impossible, to manage the rising costs of private in-home care.
The bottom line is that adult children of aging parents with needs are looking for two things: solutions and flexibility. Most may be unaware of their options, even if they have life insurance policies for themselves. Assisting an aging parent is a challenge that many are prepared to take head-on, but there are increased difficulties associated with this. Caught up in a busy whirlwind trying to manage all these responsibilities, adult children will be both grateful and relieved to hear some options from an experienced professional.