Life settlements should be viewed as an alternative to lapse or surrender, not as an alternative to keeping the coverage.
Once your clients understand this, it opens up the possibility to do one more good thing for them before their policy is terminated. Frequently, this infusion of cash makes a meaningful difference to the policy owners at a critical time in their lives.
Here are several cases that illustrate why you should pay attention to this option for your clients.
Male, 91, with a $982,136 guaranteed universal life (UL) policy from a top carrier and a life expectancy of 65 months.
On Aug. 29, 2019, the initial offer was $325,000. It was bid up several times (three funds were interested). On Oct. 25, 2019, the final offer received was $414,000.
On Oct. 29, 2019, the client declined the offer and decided to keep the policy, as he wanted a higher amount ($10,000 more!).
On Jan. 6, we got a call from the broker that the client had changed his mind and wanted to accept the offer. We went back to the fund with the highest offer and, unfortunately, we were told that the offer was no longer available. We then went back to all the funds and, this time, the best offer that we could get was $350,000. On Jan. 23, the client again declined the offer and decided to keep the policy.
What makes this case interesting is to note that timing is everything: Funds available for investment don’t remain idle; they move on to other policies.
Male, 67, with a $2 million term policy from a top carrier and a life expectancy of 196 months.