Life Settlement and Secondary Insurance Market Solutions
Life Settlements Explained
Life settlements are an increasingly popular but often misunderstood financial tool that can transform unneeded or unwanted life insurance policies into lump sum cash settlements. A Life Settlement involves the sale of an existing life insurance policies whose funds generated are greater than the policies’ surrender values.
As is sometimes the case (sometimes more than 85% of the time) the original need for the policy has changed, the premiums have become a burden or the client may want to eliminate the policy by letting it lapse. The life settlement market allows the client to obtain market pricing for the policy. Why let a policy become a wasted asset when, in many instances it can generate substantial capital from a policy that is no longer needed?
Why Do Clients Sell?
- The policy is no longer needed or wanted
- A more appropriate insurance policy can be obtained at a better rate
- Rising healthcare costs or other financial burdens have created unforeseen needs.
- Premium payments have become unaffordable
- Change in employment status, like the case of a departing corporate executive, who no longer needs life insurance coverage provided by split dollar, key man or buy-sell situations.
- Change in financial circumstance (i.e. divorce, bankruptcy, death of a spouse, limited cash reserves).
- Change in investment needs (i.e. estate planning, charitable giving, and changes in tax law).
