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April 07, 2015 at 02:26 PM
There are good reasons for the more than 20 percent –year-over-year growth of life settlements. Start with great client benefits from transactions that are safe, monitored, and often can be nothing less than financial masterstrokes. Life settlements can trigger liquidity events, put money into motion and increase assets under management.
Ironically, there are also good reasons why this reborn investment tool isn’t growing even faster. Despite such dramatic growth, life settlement remains commonly misunderstood. Your clients and your practice deserve the facts.
A recent survey of financial advisors was recently conducted by The Lifeline Program and Penton Research. You can download this compelling, comprehensive, easy to read white paper here. Learn about the common misperceptions and separate fact from fiction.
The conclusions say it all. Despite the growth, the clear majority of financial advisors still don’t understand today’s Life settlement options. When the facts are understood, advisors and their clients really benefit.
Basic life settlement facts
Life settlements are purchased life insurance policies that no longer make sense as part of a client’s investment strategy. This is often a hidden asset, as many policies can yield more than the face value of the contract.
That’s not only good client news that’s a pleasure to deliver. A life settlement also showcases broader advisor investment acumen, cements client relationships and builds the advisor’s personal brand.
What’s new and improved
Much has changed since life settlements were introduced over twenty years ago. Today’s transactions are safe, secure, and flexible, with diverse client benefits and advantages. Today’s settlement companies are licensed, regulated, monitored, and subject to state statutes and insurance commissions. Trustworthy buyers that make confidentiality and privacy priorities, and no special knowledge or skill set is required for advisors.
Fiduciary best practices
Life settlements can be a dynamic event and a tempting option, but as with any investment, they should only be used when the advisor has determined they make sense for the client. If the policy aligns with the investment strategy, the client is pleased with the policy and can afford it, it may make sense to leave it in place. Estate tax considerations should also be factored in.
