A Secondary Market for Clients’ Life Insurance Policies
Do you have clients who have life insurance policies:
- They can no longer afford?
- They no longer need (e.g. because of changes in the Estate Tax, etc.)?
- Which no longer fill the original income replacement or legacy desires they once had?
- That are “blowing up” because of underfunding (e.g. with Universal Life, where original premiums are no longer adequate)?
- They are planning to surrender for their cash value to the insurance carrier?
For decades, life insurance policies owners had one source that determined the current value of their contracts – the insurance carrier. And, those values are based on the “cash surrender value” of the policy. Carriers had what is called a “monopsony”. This condition exists when there is only one market maker for a particular commodity.
In recent years, Life Settlements have emerged as an appropriate market for policy owners to receive a “second opinion” on the value of their contracts with the insurance carriers. Unlike Viatical Settlement that deal with the sale of policies on people with life expectancies of 24 months or less, Life Settlements focus on life expectancies of between 24 months and 15 years.
A Life Settlement involves the transfer of ownership of a life insurance policy to a third party in exchange for a cash amount that in some situations can be substantially higher than the cash surrender value from the carrier. The amount of the settlement offer depends upon the life expectancy of the insured, the type and conditions of the policy and the available funds in the buyer network.
AIB has been working in this market for some time now. We have researched the funding sources and we have successfully assisted with the completion of client settlements. From these experiences, we have identified what we believe to be are the most ethical and viable partners for obtaining the best offers.
If you would like to discuss how you may utilize a Life Settlement for your client, contact our Life Team at (800) 695-8224 Option 3.