The Life Settlement Market
Strategies for unneeded life insurance policies
What a settlement opportunity looks like
Life settlements is an often-overlooked area of planning, but they should be part of the modern advisor’s insurance planning practice. Unneeded policies are frequently viewed strictly for their surrender value – but for many clients, a settlement may represent more value for them and their loved ones.
Highland has close relationships with multiple parties in the settlement market to support you and your clients. Advanced Planning is also a potential resource to begin the discussion concerning a potential settlement.
Options abound for unneeded policies
Millions of policies are lapsed each year – despite the fact that many of them could be a good fit for a settlement. A good example of that would be a client who’s generally older than 65, possibly even 70. Unlike in years past, a client doesn’t necessarily need to be in poor health, though that could impact the offer they receive.
The opportunity
The “outgrew-my-objectives” policy
Trust-owned life insurance policies purchased when lower estate-and-gift-tax exemptions were the norm. Now with little estate-tax exposure, clients prefer their gifts were used by their beneficiaries now.
The “no-cash-value” Guaranteed Universal Life policy
These policies offer little or no cash value, making surrender unattractive. A life settlement can be a more advantageous alternative.
Access Living Benefits
As long-term care costs rise, a life settlement can provide immediate liquidity to help cover current or future care needs.
Life Settlements for retirement planning
Life settlements can create cashflow in retirement, helping delay Social Security or replace assets depleted by early retirement, disability, or job loss.
Company-owned policies
Key person, and other company-owned policies, may be candidates for settlements instead of a lapse or surrender. Decision makers should consider this as a potential alternative.