Considering the financial landscapes many clients are navigating, here's an everyday success story that underscores the importance of valuing assets, particularly life insurance, in crafting comprehensive planning solutions.
We recently worked with a client facing the challenge of an underfunded life insurance policy held within an Irrevocable Life Insurance Trust (ILIT). The policy, once thought to be a cornerstone of their estate plan, was underperforming and had become a source of financial strain due to rising premiums.
Challenges Faced:
Solution Implemented:
Results Achieved:
Impact on Comprehensive Planning: The funds from the life settlement were strategically reinvested, contributing to a more robust and diversified financial portfolio. This, in turn, allowed for the reevaluation and adjustment of the client's overall estate planning strategy.
This success story highlights the transformative impact of valuing and strategically managing life insurance assets within the context of comprehensive financial planning.
To find out if your client's policy may qualify for a life settlement, try our probability calculator.
Ashar Group is a nationally licensed life settlement firm representing the best interests of policy owners by creating a competitive policy auction to deliver the best value to the seller. Ashar Group does not sell life insurance, management assets, or purchase policies. We are an independent resource for fiduciary advisors and their clients specializing in life insurance valuation for planning purposes. Contact us today.
In a recent conversation, an advisor shared the tension and anxiety related to adult children in their 30s to 50s having conversations with their parents about aging, future caregiving needs, and health changes. A key factor is financial independence or dependence on the family.
As retirement has changed over the past several decades, longevity has become a vital component of financial planning. With people living longer, continued inflation, and rising healthcare costs, outliving one’s retirement plan is a real concern.
This is why a frank discussion about health, longevity, and long-term care needs to be part of every retirement strategy session with your senior clients. Here are a few thoughts to get the conversation started with clients.
What type of information is discussed or gathered in ongoing planning discussions with clients? Many advisors use age 95 as a standard life expectancy for retirement planning because it’s a conservative estimate. When it comes to finances in one’s advanced years, being conservative is important. However, to develop the most sustainable financial plan, some advisors have opted to use a longevity calculator instead of the industry standard for every client. This will allow you to create a more personalized plan for every client.
Consider including the following question on planning checklists about physical and mental health, lifestyle, and their vision for what their life looks like in their late 80s to 90s.
"If there was a change to your health, where do you see yourself living? At home or in a community with others your age? Does this change if one spouse passes before the other?"
The good news can sometimes be the bad news. It's wonderful that people are living longer than anticipated, but often, their financial plan did not project them living into their late 80s to 90s. What if the planning is running low on cash flow? Retirement-age client’s health history and outlook are vital when it comes to effective retirement planning.
For example, a client who lives only to age 70 but spends the last five years of life in a long-term care facility could very well end up needing more money in retirement savings than a healthy person who ages in place and lives ten years longer.
Long-term care has become financially burdensome for most families, and those expenses continue to grow.
Since Medicare and Medicaid cover only a percentage of the care most people entering nursing facilities need, seniors - and their families - are left to make up the difference. With annual costs for a private room in a nursing home close to $110,000, that difference is often significant.
Having an open discussion of your client’s health history, family health history, and longevity expectations can help set realistic goals regarding how much they may need to cover long-term care.
"How are you planning to pay for those later years? The average cost can range between $5K- $10K per month for any higher quality option."
Over one-third of the country will be part of the longevity economy, which in turn could financially impact the remaining two-thirds of the country. How are families prepared to address the potential cash requirements for their aging parents and loved ones? This is also a good time to bring an alternative for paying for long-term care – life settlements. This solution allows clients to sell their life insurance policy for a lump sum of cash that’s greater than the policy’s cash surrender value.
On average, a life settlement transaction using a competitive auction platform through an independent life settlement broker can earn your client 5x the cash surrender value. This not only creates liquidity but also eliminates future premium obligations, allowing those funds to be used for other planning needs like retirement, investments, and long-term care.
"Do you foresee your adult children or someone else assisting in paying for long-term care? Have you explored all available options to fund these needs?"
Longevity Throws a Wild Card in Even the Best-Laid Plans
Society of Financial Service Professionals
by Jamie L. Mendelsohn, EVP, Ashar Group
Ashar Group is a nationally licensed life settlement firm representing the best interests of policy owners by creating a competitive policy auction to deliver the best value to the seller. Ashar Group does not sell life insurance, management assets, or purchase policies. We are an independent resource for fiduciary advisors and their clients specializing in life insurance valuation for planning purposes. Contact us today.
Enjoy more blogs in our Longevity Series:
Shooting for the Centenarian Club
The Keys to Longevity – It’s Never Too Late but Start Now!
By: Bill Clark | Senior Director, Ashar Group
Longevity Series - Blog #2 (2-minute read)
Experts agree that VO2 max and muscular strength are the keys to longevity. It’s never too late to get started, but the benefits can be greater if you start the right training program during your prime working years. The more I study the secrets of longevity, the more confused I become. I’ve come to realize that you have to look for common themes and then try something to see if it works for you. I’m age 74 and trying to turn back the clock physiologically and end up living longer and healthier. I’ve always been involved in athletic endeavors, but I realize now that what I have been doing is not enough.
For the time being, I’m an enthusiastic fan of Peter Attia, a medical doctor who wrote the book OUTLIVE- The Science and Art of Longevity. Some of his material is very in-depth, and there are some YouTube spots that are very short and informative. It’s not a bad place to start your journey to live longer and healthier by listening to this short conversation, VO₂ Max and Muscular Strength: The Keys to Longevity, from the Tim Ferris show. You could bury yourself in YouTube videos and podcasts by Peter Attia and other “experts” on longevity.
For me, this whole journey is going to take me longer than I thought, but it’s worth it. I just started this Longevity Insights blog series, and I’m not even sure where I’m going with it yet, so you’ll have to be patient with me. I know that my main objective is to help people at all stages in life find information that will make their lives better and more fulfilling. It’s meant to apply to people of all ages and physical abilities and to financial professionals, their clients, and centers of influence. My next post will be on “Why we fall as we age”. If you are age 50 or older, you better “step up” right now (no pun intended, as you will see in the next blog). If you are younger, it pays huge dividends to incorporate the right training into your schedule now. The key to living a long and healthy life starts when we are too busy working and raising a family to give it the attention it deserves. The cost may be too high for you to ignore it. Stay tuned.
Ashar Group is a nationally licensed life settlement firm representing the best interests of policy owners by creating a competitive policy auction to deliver the best value to the seller. Ashar Group does not sell life insurance, manage assets, or purchase policies. We are an independent resource for fiduciary advisors and their clients specializing in life insurance valuation for planning purposes. Contact us today.
A corporate-owned life insurance policy is generally purchased to protect a business in the event a key partner/employee of that business passes away. Among other benefits, the insurance policy helps to bridge the gaps the death of that individual causes and ensures the company continues to function. But what happens to that policy with the individual retires?
Life insurance may have considerable value that can be uncovered by an independent appraisal. Like any other asset – real estate, jewelry, automobiles, artwork – value depends on what the market will bear. Life insurance value on the secondary market can vary depending on the conditions present at the time of sale. To avoid your business clients making uninformed decisions, paying unnecessary premium payments, or missing lucrative planning opportunities, it is important to understand the fair market value of a corporate-owned policy first.
The primary factors in determining the value of a life insurance policy are the policy details and the estimated life expectancy of the insured.
Policy details include:
Life expectancy is estimated based on:
When selecting an appraiser to value the life insurance policy, it’s important to choose an independent resource – one that does not have any interest in purchasing the policy but who also has the knowledge, qualifications, and historical comps to provide an accurate analysis that allows your clients to make an informed decision and ensures their best interests are served.
There are many planning scenarios where a life insurance valuation would benefit your clients. One reason is that the appraisal may uncover significant life settlement value. In some cases, exchanging the policy for cash now makes the most sense. In the case of this retiring business owner, the life settlement was more than the value of the business itself.
Ashar Group is a nationally licensed life settlement firm representing the best interests of policy owners by creating a competitive policy auction to deliver the best value to the seller. Ashar Group does not sell life insurance, manage assets, or purchase policies. We are an independent resource for fiduciary advisors and their clients specializing in life insurance valuation for planning purposes. Contact us today.
Advisors ask their compliance departments, “How can I tell my clients that I provide comprehensive and holistic financial planning yet not disclose the life settlement option when appropriate?” With an aging population, many clients prefer to receive a buyout of their existing life insurance for an amount that is higher than their cash surrender value, providing liquidity for investments and other retirement needs.
View the full article:
Longevity Series - Blog #1 (4-minute read)
This is personal. If you’re not paying attention to clients like me, you’re missing out on a huge growing segment of the financial planning arena driven by baby boomers. At my age (74), I’m on the leading edge of the boomers.
In September of last year, I broke my back when took a Superman flight over the handlebars of my mountain bike. I knew immediately this was different than my previous accidents where I was sidelined for several weeks because of torn muscles and ligaments in my shoulders. This time, I couldn’t walk for a while and my thumb and two fingers on my right hand were numb. This one really scared me.
This kind of accident can easily take you out of the game if you’re over age 70. Over the next several weeks, I lost significant muscle mass in my legs. I started physical therapy and sold my mountain bike and bought a recumbent trike with a motor assist so that I could stay active and keep up with my wife on paved trails. Until recently, I found it impossible to get up off the floor without assistance. I’m fortunate to be married to a health nut that still rocks her mountain bike at age 65. I was healthy before the accident and determined to get even healthier now with her help and the example she sets. Peter Attia, author of the New York Times #1 Best Seller “Outlive” is now one of my health mentors. His video is a real eye opener. Be sure to click on the pdf link below the video. This morning, my Garmin watch told me that my fitness age is now down to 71.5 years and my VO-2 max is increasing. I’m shooting for a fitness age of 67 within the next year.
I work in the life settlement market where 87% of settled policies are on insureds age 70-100+ (Source: Ashar Group). Clearly, this is a market that gives the advantage to retirement age clients. Many of these insureds have shortened life expectancies due to health issues or increased longevity. Health arbitrage is a key factor influencing the value of a policy in the settlement market. I own a 20-year convertible term policy that is reaching the end of its term shortly. You can bet on the fact that I’m going to check to see if it has any value on the secondary market before my term period ends. Secretly, I hope that it doesn’t have any value because my life expectancy will be too long. God willing, I hope to be a centenarian in good health and enjoying life to its fullest.
The focus of my financial planning has now switched to maintaining a healthy and active lifestyle until the angels come calling. Joseph F. Coughlin, founder of the MIT AgeLab and author of the #1 New York Times bestseller The Longevity Economy, provides the insight business leaders and financial planners need to serve the growing older market: a vast, diverse group of consumers representing every possible level of health and wealth, worth about $8 trillion in the United States alone and climbing.
BTW, I recently purchased an all-road bike and got back on two wheels, but not on mountain bike trails. It works a whole new set of leg muscles, and nine months after my accident I was able to get off the floor this morning using only my legs. I thought I might never see that again. Pay heed to the financial needs of “boomers” who are bound and determined to live longer and stay healthy and active. Because of increasing longevity, they need to reset their financial planning horizon with your help. Gotta go now. Amazon just delivered a new piece of fitness equipment to my doorstep.
Bill joined Ashar Group in 2006. He has been instrumental in helping financial professionals understand longevity planning to better serve their clients.
Ashar Group is a nationally licensed life settlement firm representing the best interests of policy owners by creating a competitive policy auction to deliver the best value to the seller. Ashar Group does not sell life insurance, management assets, or purchase policies. We are an independent resource for fiduciary advisors and their clients specializing in life insurance valuation for planning purposes. Contact us today.
Broker-dealers, banks, ILIT trustees, insurance carriers, and planners with a fiduciary duty understand that part of protecting clients' best interests means offering all the available options and recommendations to help clients meet their planning goals. When it comes to life insurance, many factors affect whether a policy still meets the original purchase goal. As policy owners age, they outlive their original planning goals, interest rates affect policy performance, and life situations change. Therefore, the need for their life insurance coverage may change too. Sometimes that means exiting a life insurance policy that no longer serves a positive financial purpose.
There is a valuable alternative to lapse or surrender. A life settlement is a buyout of an existing life insurance policy for more than the cash surrender value and less than the death benefit.
Over time, compliance officers have come to recognize that if life settlements are pursued for the right reasons, after a thorough review of all non-forfeiture options and suitability, a life settlement could very well be in clients' best interests. It is a viable exit strategy that should be disclosed in a comprehensive policy review in partnership with a resource that offers a compliance-centric process. However, broker-dealers do not just allow life settlements carte blanche. They put strict procedural guardrails in place to protect the company and their representatives from liability risk.
When you or your client encounter marketing by a life settlement company, they may all sound the same. It is exceedingly difficult for even the most experienced advisors to differentiate between a company representing their client's best interests and one representing the buyers. There are multiple factors compliance officers consider when selecting a life settlement company. However, there are common mistakes to avoid that revolve around ensuring that your clients receive independent and knowledgeable representation that protects their best interests.
Ensuring the life settlement company has a fiduciary duty to your client, the policy owner, is the most critical factor in approving a compliance-centric resource.
There are key elements that compliance officers look for when completing their due diligence in the approval of a life settlement partner.
Although compliance officers are responsible for protecting the best interests of the company they represent, they have historically hesitated to approve life settlements for advisors to offer as an option to clients. Ninety percent of states regulate settlements, alleviating past concerns and helping to integrate this solution into mainstream planning. Broker-dealers do not advertise or promote life settlements, so we encourage advisors to check with their compliance department to ask if they have an approved life settlement resource.
Over the past 20 years, we have undergone numerous lengthy due-diligence processes and assisted in designing compliance-centric workflows for many of the largest nationally recognized broker-dealers. Discover how we're different by design.
Ashar Group is a nationally licensed life settlement firm that acts as a fiduciary to protect the best interests of policy owners by creating a competitive policy auction to deliver the best value to the seller. Ashar Group does not sell life insurance, management assets, or purchase policies. We are an independent resource for fiduciary advisors and their clients specializing in life insurance valuation for planning purposes. Contact us today.
Your client’s life insurance policy may be the most valuable asset they own.
Seniors in retirement often drop their life policies. The reasons are many; the original need may no longer exist, they may need to eliminate expensive premium payments, or they just need some additional liquidity to help with medical costs and retirement needs. There could be a better way...
A life settlement is the sale of an existing life insurance policy for more than the cash surrender value and less than the death benefit.
Five Common Life Settlement Scenarios:
Who has the best chance of qualifying for a life settlement?
Anyone age 65 or older who has developed health issues since their policy was issued and owns a universal life or convertible term insurance policy has a high probability of benefiting from selling their policy. Policies with a death benefit of $250K or more can qualify. Even policies used in estate planning and business protection with death benefits from $2M - $100M can qualify. Younger policy owners with serious chronic illnesses can also explore the life settlement option. There are many scenarios where a client could qualify for a life settlement.
PRACTICE TIP: Never surrender a life insurance policy without first checking for life settlement value!
Ashar Group is a nationally licensed life settlement firm that acts as a fiduciary to protect the best interests of policy owners by creating a competitive policy auction to deliver the best value to the seller. Ashar Group does not sell life insurance, management assets, or purchase policies. We are an independent resource for fiduciary advisors and their clients specializing in life insurance valuation for planning purposes. Contact us today.
Responding to online advertising and generic value calculators can mislead client expectations. Many things in life rarely come about; when this happens, the average person doesn’t have the knowledge to make a good decision. This can be true for financial professionals and consumers alike.
Understanding life settlements is one of those things. Where do advisors and consumers go to find the answers to questions about life settlements? If you Google life settlements, you will come up with 152,000,000 results. Even if you zoom past all the paid ads, you are still left with an abundance of contradictory opinions and information. Consumers are particularly vulnerable when they respond to direct-to-consumer TV commercials and social media ads about life settlements.
If you’re an advisor, who would you listen to, and how would you know if you can trust them to serve the best interests of your clients? Most of these ads come from life settlement lead generation companies and life settlement providers that represent the best interests of buyers wishing to purchase existing life insurance policies at a highly discounted price. It’s a good deal for the buyer but a bad deal for your clients. Furthermore, it’s almost impossible to use Google to determine whether you’re working with a licensed life settlement provider representing the buyer’s best interests or a licensed life settlement broker with a fiduciary duty to represent the best interests of the policy owner selling the policy.
This is precisely why attorneys, CPAs, CFPs, RIAs, and client-centric life insurance professionals do not rely on Google, social media, or television ads to determine who they should trust to help their clients. They use a more comprehensive due diligence process to protect themselves and their clients.
The strategy behind life settlement calculators
Most online life settlement platforms connect policyholders directly or indirectly with licensed providers that represent the best interests of buyers. They aim to lead your client to provide information by completing their life settlement calculator, then give them an arbitrary value and engage them in conversation. This is a problem for your client because the value indicated is, at its best, only a guess. The minimal output from a calculator is rarely accurate, and the potential offer is changed after additional medical, financial, and policy information is obtained. This misleads your client and forces them to lower their expectations. Often a highly discounted offer will be presented to your client based solely on the information provided on the calculator, and the deal can be closed quickly. Too quickly!
Moving too fast in life settlements can come with some inherent risk for you and your clients. If your client is involved in a life settlement process emphasizing speed, you might suggest they tap the brakes and determine if they are sitting on the wrong side of the negotiation table.
Bottom line: Complex transactions that require sophisticated underwriting and a negotiation process take time. There are only two licensed entities that sit at the negotiation table. Life Settlement Brokers represent your client’s best interests, and Life Settlement Providers represent the buyer’s best interests. Fast life settlements are risky. Slow down on the front end to verify that your client is represented by a nationally licensed life settlement brokerage firm experienced in case design and conducts a transparent policy auction between multiple providers to drive more value to your client. They will be glad you did!
Ashar Group is a nationally licensed life settlement firm that acts as a fiduciary to protect the best interests of policy owners by creating a competitive policy auction to deliver the best value to the seller. Ashar Group does not sell life insurance, management assets, or purchase policies. We are an independent resource for fiduciary advisors and their clients specializing in life insurance valuation for planning purposes. Contact us today.
Ashar Group has created a special checklist for tax season that helps you conduct a new and timely discussion that strengthens your current relationships and opens the door to new ones.
Most tax practitioners are unaware that existing life insurance policies can provide a value significantly higher than the cash surrender value offered by the issuing insurance carrier.
“Almost 85% of term policies fail to pay a death claim; nearly 88% of universal life policies ultimately do not terminate with a death benefit claim. In fact, 74% of term policies and 76% of universal life policies sold to seniors at age 65 never pay a claim.”
Wharton School Study by Daniel Gottlieb and Kent Smetters
What happens to all those policies that were put in place to protect families and businesses? They are lapsed or surrendered. Most of those policies are dropped by senior clients in financial transition. The reasons are many. Their policy may no longer be needed for estate tax planning, they are outliving their coverage, the policy is too expensive to maintain, a business owner is retiring, or they are going through bankruptcy proceedings or divorce proceedings. Often, they simply want to apply any cash they can obtain from the policy and use that cash - and the ongoing premiums they have been paying - to other aspects of their financial plan. They may need extra cash for medical or caregiving expenses, donate money to charity, or simply maintain their standard of living during retirement. Furthermore, many tax advisors and consumers are unaware of the additional value that can be obtained through a life settlement.
What can tax professionals and financial advisors do to help?
It’s simple, all you must do is be in the right place at the right time before your client decides to lapse or surrender an existing life insurance policy. That’s where our Tax Planning Checklist for Existing Life Insurance comes in. Tax season is the perfect time to reach out to your clients and tax professionals and ask them the questions on the tax planning checklist. This creates awareness about options that are available that could have a significant impact on decisions that they make when considering dropping their existing life insurance coverage.
We’ll be at Finseca in D.C.
Please stop by the Ashar Group booth #201 to get access to the Tax Season Checklist and options to co-brand this checklist.
