Why Should A Client Sell Their Policy?
In a recent study conducted by the Wharton Financial Institutions Center, The Benefits of a Secondary Market for Life Insurance Policies, it was found that on average a seller can realize 3.6 times the cash surrender value by entering into a life settlement transaction.
Listed below are some specific reasons why an owner of a life insurance policy may want to sell:
Life Insurance Needs
- Premiums too costly
- Beneficiaries no longer living
- Funeral expenses no longer an issue
- Debts have been eliminated
- Replacement policy is desired (with reduced premiums, different coverage or both)
- Current economy requires changes in retirement planning
- Other family concerns
Financial Situation
- Policyowner has long-term care or other medical needs
- Policyowner wants to meet assisted living care expenses
- Policyowner has an emergency need
- Policyowner wants to eliminate debts
Financial Priorities
- Policyowner wishes to make gifts to family members while still living
- Policyowner wishes to make gifts to charities
- Policyowner wishes to make other investments
- Policyowner wishes to purchase a vacation or retirement home
- Policyowner simply wishes to use the funds for other purposes (vacations, etc.)
Estate Planning
- Business has been sold or liquidated or is up for sale
- Insured no longer a “key” employee involved in day-to-day running of business
- Policies no longer needed to fund deferred compensation packages
- Policyowner may require funds to buy out partner's interest
Business Insurance Needs
- Estate tax laws have changed
- Estate has become more liquid
- Estate has become less liquid
- Other insurance options more in line with estate's long-range goals
This list is intended as a general guide only. There can be many reasons to seek a life settlement.
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