Thanks to the proliferation of services like Uber, Airbnb, Lending Club and a host of others, sharing services have become a multimillion dollar industry.
At the heart of the sharing economy is the notion that everyone can benefit when people use the goods or services they don’t need to benefit those who do.
The growth of the life settlement market, which allows owners of life insurance policies to sell to an investor, is another entry point into the new, cooperative world of shared rides and rented rooms.
(Related: How Finance Will Follow Airbnb and Expedia)
Here are three key reasons why seniors who utilize services like Uber might also be ready to learn about life settlement options:
1. Seniors are increasingly comfortable with the sharing economy.
Sharing services might seem to be geared toward millennials, but statistics indicate that older Americans are realizing the benefit of services like Uber. According to PricewaterhouseCoopers’ Consumer Intelligence Series, 17% of Americans 65 and older consider themselves providers in the sharing economy, compared to just 7% of all Americans.
What started with ride sharing and other simple conveniences is allowing those in the over-65 demographic to consider life settlements when the circumstances surrounding their life insurance policies have changed. For policy holders who are struggling to pay their premiums, or those whose beneficiaries don’t need the payout anymore, life settlement is often the optimal choice.
2. Policy owners capitalize on underutilized assets.
Decades after purchasing a life insurance policy, individuals often realize that the reason for establishing or funding the policy no longer exists. If the situation of their beneficiaries or changes to tax laws make policy holders view their life insurance differently, a life settlement will enable them to get the most value out of something that is no longer needed in the long term.
Sharing services like Uber have demonstrated that seniors can take charge of their underutilized assets and allow those assets to work for them. Just as you can drive for a ride sharing service if your car is underutilized or rent your home if you have extra space, you can seek the best way to capitalize on the value of an underutilized financial asset: your life insurance policy.
This is increasingly important to financial professionals because more and more clients may find that they have life insurance policies that now look like underutilized assets. Since the majority of seniors are unaware that their life insurance policy can be sold, financial professionals are positioned to help educate their clients about the financial benefits of life settlements.
3. The sharing economy generates new income.
One out of every four baby boomers plans to work until the age of 70, and life expectancies are higher than ever before. These dynamics are driving senior adults to seek new revenue streams that can help fund anything from travel to new investments to long-term care expenses.
According to research from the Insurance Studies Institute, more than 500,000 seniors lapse their life insurance policy annually, and only 1,250 take advantage of a life settlement. About 90% of seniors report that they would have considered a life settlement if they had been made aware of the option.
Like Uber, life settlements make sense for many consumers, allowing the best use of underutilized resources and ultimately creating new opportunities due to the revenue they can generate.
As seniors embrace the new and efficient movement toward sharing, they also need advocates to help them understand the facts and benefits regarding the sale of their life insurance policies.
— Read The Life Settlement Process Could Soon Be a Lot Better, on ThinkAdvisor.