Talking to Seniors about Life Settlements as a Financial Option

When Discussing Paying for Senior Living and Health Care, the Option of a Life Settlement Should be Part of the Dialogue

Retirees choosing to move from their houses into continuing care or over 55 communities may feel uncomfortable with the initial financial outlay or have concerns about their economic future when challenges arise. Let’s face it – the combination of a fixed or declining income, increased health costs, and changes in family circumstances can be a daunting recipe for seniors.

For some, a Life Settlement - selling a life insurance policy (one they no longer need or one whose premiums are no longer affordable) can provide useful funding for their health, retirement, and housing expenses. Here are some things to help you gain an understanding of the nature of a life settlement and when selling a life insurance policy is appropriate

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Senior Client Brochure

Give your senior clients an educational and user-friendly brochure explaining how life settlements can be a financial option to fund living and healthcare expenses.

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Life Settlements for Charitable Organizations

Procuring Needed Capital from Donated Life Insurance Policies

Those who are employed by non-profit organizations and foundations as fundraisers and planned giving officers will want to be aware of the opportunities associated with increasing revenue through Life Settlements.

Some of your donors have made extremely generous gifts with the intention of the charity benefiting only upon the death of the donor. When the charity needs to realize funds sooner rather than later, a life settlement emerges as an effective financial planning tool.

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Life Settlements: The Appropriateness of Selling Life Insurance Policies to a Secondary Market

In a Senior Life Settlement, Clients Rely on their Financial and Legal Advisors for Proper Due Diligence

No longer is life insurance an “untouchable” product that must always be held until death. Life insurance is merely one asset within an estate or financial portfolio that should be managed for optimum outcomes. Rather than letting a policy lapse, not converting a term policy, or accepting the carrier’s nonforfeiture options, your qualified clients’ policies can be appraised on the secondary market where you learn what the policy is worth in cash and as a paid-up policy.

As a financial advisor, you can help your clients tap the liquidity that may be hidden in unneeded life insurance policies. However, understanding that you have a responsibility to represent the seller’s interest in a life settlement transaction, you have a fiduciary duty to your client in determining suitability of this option and making recommendations regarding the sale of a life insurance policy only after evaluating all aspects of your client’s financial position and overall investment strategy.

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Major Gifts Campaigns for Life Insurance Policies

Presenting the Option of Life Settlements to Donors

In order to proceed wisely with a Life Settlement, it is important for fundraisers to be well informed, and conduct a meaningful review and assessment of the organization's database for qualified candidates. Carrying out the process combines the expertise of knowledgeable advisors, a network of licensed professional mentors and agents, and a good educational marketing plan.

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Questions and Answers Regarding the Process of Life Settlements

Generally speaking, the surrender value on a life insurance policy is a fraction of what one may receive from a life settlement transaction. The secondary market may provide funds that reach 5-8 times the amount of the cash surrender value including convertible term policies that do not even have a cash value.

  1. What is a Life Settlement?
  2. I’ve been told that life settlements are illegal. Are they?
  3. Is a life settlement the same as a viatical settlement?
  4. What are some of the reasons why I might consider the sale of my life insurance policy to a life settlement company?
  5. What specific advantages can a Life Settlement provide?
  6. Does the sale of a Life Insurance policy raise any special concerns or risks?
  7. Who is going to buy an unwanted life insurance policy?
  8. What is my Life Insurance Policy Worth in the Secondary Market?
  9. What is the Life Settlement process?
  10. Why work with a broker and agent (life settlement intermediary)?
  11. How long does it take to get the funds from a life settlement?
  12. What are the fees for a life settlement transaction?
  13. What are the Tax Implications for Life Settlements?
  14. What happens to my life insurance policy after I enter into a life settlement contract?
  15. What are the alternatives to entering into a life settlement?
  16. Can a life settlement apply to a donated policy to a charity or other tax-exempt entity?
  17. Case Scenarios

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