Creating Life Settlements Awareness  — for the 100th Time

2. Too often we still hear, I’ll sell my policy if I get a good enough offer for it, otherwise I’ll keep it.

Life settlement investors typically price their offers using discount rates exceeding 15%. Mathematically, a “good enough” offer is only possible if the seller is able to get better than a 15% compounded tax-free return on the settlement proceeds. Since that kind of return is unrealistic, a “good enough” offer is not really possible. Life insurance can be a uniquely valuable asset. A life settlement should not be considered as a speculative financial transaction, but rather should only be considered when a policy is about to be terminated. Remember, a life settlement is an alternative to surrendering a policy — not to keeping it.

3. There are still far too many missed term insurance life settlement opportunities.

Term insurance policies that are convertible to universal life make great life settlement prospects. Sellers are often in a situation where they cannot afford to convert or continue a term policy after the initial rate guarantee period. A partial conversion combined with a life settlement can be a great solution. Even if retaining some insurance is not desired, a life settlement is a great way to salvage some money from a term insurance policy that would otherwise lapse without value.

4. While many life settlement transactions are just financial transactions aimed to maximize value from a policy that would other be lapsed or surrendered, some of these transactions are much more meaningful and have truly made a difference in people’s lives.

Among our most memorable cases were those that provided money to make homes wheelchair accessible for ALS patients, for experimental cancer treatments, for home health care, and to keep other insurance in force. Delivering a life settlement check can be like presenting a death claim check to a widow or a disability income check to someone who is disabled.

Life settlements are one more opportunity to do something good, and sometimes life changing, for your clients and prospects. We look forward to continuing to share our insights and expertise on life settlements with you each month. If you haven’t taken notice of someone who has a policy that is about to be lapsed or surrendered and then tried to see if it could have value in the secondary market, then perhaps you are not offering your clients the best available alternative.

As we have said in the past and will continue to say in the future, “It can’t hurt to try — it can only hurt not to.”

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Robin S. Weinberger, CLU, ChFC, CLTC, has served as general agent and director of national accounts for Connecticut Mutual and vice president of marketing for Sun Life of Canada. She is also an active personal producer. Since 2003, Weinberger has specialized in life settlement brokerage services and is currently the director of national accounts for Life Insurance Settlements Inc. She can be reached at [email protected] or (617) 451-3343.

Peter N. Katz, J.D., CLU, ChFC, has spent more than 30 years in the life insurance and financial services industry as an advanced markets attorney and in product development. He is currently a life settlement broker and co-director of national accounts with Life Insurance Settlements Inc., as well as a consultant specializing in life insurance advanced sales illustrations. He can be reached at [email protected] or (860) 673-3642.