Whether you’re a financial advisor, estate planning attorney or certified public accountant (CPA), as an expert working on behalf of your clients, it’s your duty to provide them with all the information they need to make sound financial decisions. If you work with senior clients, you understand that their needs shift and evolve as they age. Seniors often require assistance navigating these changes so they can make tough judgment calls with confidence.
What some financial gurus don’t fully understand is the life settlement market and how it can benefit their senior clients—especially those who experience a major health event or illness.
How Health Status Impacts a Life Settlement
The secondary market, where life insurance plans are bought and sold, is a great place to seek relief for your clients who need financial support more than they need their life insurance policy. Policyholders may wish to sell their life insurance for any number of reasons, but in many cases, seniors need money to cover healthcare and related costs, including but not limited to:
- Medical services, procedures or drugs not covered by Medicare
- Home health aide services
- Long term care
- Nursing home care
- Assisted living
Paying for these expenses can become even more challenging if your client does not have a spouse or other family members to lend support. For example, if a widowed client falls ill and requires long term care or assistance from a home health aide, she will likely struggle to afford these costs—which can total thousands of dollars a month. Money from a life settlement could help her pay for the medical services, while also relieving her of the burden of monthly or annual insurance premiums.
If her former spouse was named the beneficiary on her policy, this approach makes even more fiscal sense: Letting the policy lapse or surrendering it back to her insurance carrier would mean no one claims the death benefit, as the insurance company would absorb the payment and all of her years of paying premiums would ultimately be for naught.
As life settlements become increasingly popular, it’s critical for financial advisors to educate their clients and walk them through the application process. Advisors who aren’t discussing life settlements with their clients who own life insurance policies run the risk of their clients discovering them on their own, indicating a lack of diligence on the advisor’s part.
If you have a client who is 65 or older and who owns a term, whole or universal life policy with a face value of at least $100,000, obtaining a quote is the first step toward securing their financial freedom.