Guiding Your Client Through the Life Settlement Process

Green Settlements Staff

Table of Contents:

  1. Understanding Basic Qualifiers
  2. Finding the Best Fit
  3. Exploring Partial Life Settlements
  4. Unlocking Hidden Value

The life settlement industry was established over 20 years ago; however, it remains an oft-overlooked piece of the life insurance and investment puzzle. Insurance agents and policyholders alike sometimes struggle to grasp the financial stability life settlements can provide, due primarily to a lack of readily available resources. Although they’ve been around for a while, life settlements have not historically received much attention or public awareness.

Life settlement transactions can provide seniors who no longer wish to maintain their policy with sorely needed financial support. At the same time, life settlements can help insurance companies build stronger, more robust futures. The secondary market for life insurance not only keeps existing policies in play, but life settlements generate cash for the purchase of new life insurance policies that better serve a client’s needs.

So, what exactly do you—a licensed insurance agent—need to know about life settlements in order to satisfy your clients and provide them with the full scope of available options? Here are a few key features and benefits to know upfront:

Understanding Basic Qualifiers

Life settlements are well-suited for policyholders aged 65 and older who own a term, whole or universal life policy worth at least $100,000. Your client’s age and health status play a role in how much their life policy will ultimately be worth on the secondary market.

Finding the Best Fit

Not every life insurance policyholder is a good candidate for a life settlement. Rather than presenting life settlements as an option for seniors to “get fast cash,” these transactions should be positioned as an option only for those who really have no need for their existing life insurance, and who would otherwise abandon the policy or let it lapse. For example, seniors who are considering surrendering their policy back to their carrier are great candidates because they have already decided they no longer want their policy.

A client struggling to pay their medical bills due to an illness is also likely to benefit from a life settlement. By using their settlement as a source of financial support, they’ll be in a better position to pay off medical debts and focus on treatment.

Exploring Partial Life Settlements

For policyholders who can’t afford their premiums but still want to be protected, they can opt to sell just a portion of their policy. This will allow them to remain partially protected under the remaining portion of the policy, which is called a retained death benefit, while also receiving a settlement.

Unlocking Hidden Value

Many clients are unaware that their term policy could contain hidden value. By recommending a life settlement as the end of their term approaches, you are essentially ensuring your client does not simply walk away from a valuable asset they can—and should—take advantage of.

Life settlements have flown under the radar for years, but with increased publicity in the form of occasional news coverage, plus internet and television advertisements, policyholders are becoming more and more familiar with their options. Agents who fail to discuss life settlements with their clients risk losing out to competing sources.

To learn more about how life settlements can help your clients secure their financial futures, contact us for more information.

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