As a financial advisor or agent, you’re likely always on the hunt for ways to grow your client portfolio and expand your expertise. Until recently, life settlements were an oft-overlooked source of income for senior clients seeking financial relief.
Getting Ahead of the Curve
One reason life settlements have not been pursued in the past has a lot to do with public perception—or in some cases, misperception. In years past, the industry endured negative press coverage, causing policyholders to regard life settlements as a risky and ill-advised investment. After the passage and enforcement of several laws, however, the life settlement market has become a much safer place to do business.
Another contributing factor simply comes down to a lack of knowledge. Until now, both advisors and policyholders knew little about the secondary market—the marketplace where life insurance policies are bought and sold. For years, licensed advisors have relied on selling financial products such as life insurance, annuities and mutual funds. But as more and more consumers learn about what life settlements have to offer, often through direct-to-consumer channels, financial advisors would do well to follow suit.
Adding life settlements to your repertoire is beneficial for two primary reasons:
- As previously mentioned, seniors with unwanted life insurance policies are starting to catch wind of the secondary market. Many organizations are marketing directly to consumers themselves, but these policyholders may still have unanswered questions about the life settlement process. If your client comes to you with questions about life settlements, you must be prepared to answer them, or risk appearing uninformed.
- Life settlement transactions are a boon for financial advisors, brokers and agents looking to expand their portfolio. Not only are advisors who introduce their senior clients to life settlements helping them unlock the value hidden in their policies, they also profit from the transaction. The secondary market is keeping existing policies that may have otherwise lapsed in force, and it’s also producing cash for the purchase of new life policies. Ultimately, life settlement transactions are a win-win for advisors and their clients.
Before introducing life settlements to your senior clients, it’s helpful to do a little homework on your own first. For example, is the client in question at least 65 years old, and do they own a term, whole or universal life policy with a face value of at least $100,000? They need to meet these basic criteria to be eligible for a settlement.
When discussing life settlements, explore other topics, such as your clients’ plans for the future and their overall health status, as these things will play a role in whether or not they should consider selling their life insurance policy. The more information you have about your clients’ financial interests and needs upfront, the better equipped you’ll be to provide them with the best possible solution.