In an extremely competitive insurance landscape, protecting the client by ensuring they get fair market value in a Life Settlement should be the foremost priority in any advisor’s mind. Yet far too often, unsuspecting clients and their advisors are taken advantage of when they knowingly participate in a process that does not secure the fair market value of a policy. The “one bid should do it” doesn’t leverage the competitive bidding process to make sure they receive the most aggressive bids possible. If you don’t implement a process that obtains multiple bids, then it’s likely the client will get the short end of the stick, possibly leading to liability for the advisory team.
That’s why it is extremely important for all types of advisors to realize the possibilities of getting a SMV®, Secondary Market Valuation, of their clients’ life insurance. The SMV® incorporates the impact of obtaining a variety of competitive bids from a multitude of prospective institutional buyers. The only way to determine fair market value is by creating an environment for this competitive auction bidding process. An experienced life settlement broker has the knowledge and experience to make this happen.
If you think it would be prudent for your client to pursue a life settlement, then talk to a secondary market specialist. You can also go to https://ashargroup.com/quiz/ to take the first steps in determining if a policy may qualify for a life settlement. It only takes a minute, and it could help generate the short-term liquidity today to solve retirement and planning problems clients continue to face in these economic times.
It’s not uncommon that policies issued years ago can outlive their original purpose. There are also times when more modern products are available. Situations such as nearing the end of a conversion period for Term policies, or the challenges of underfunded policies, may result in a senior exploring the life settlement option. The uncertainty of the equity markets, combined with savings at an all-time low has also brought insecurity to this proud generation. This has caused families to consider alternative ways to care for their loved ones, such as selling their life insurance policy as a short-term liquidity solution. Here are other reasons life settlements have become a valuable option for seniors:
1. The need for liquidity makes unneeded or unaffordable life insurance policies an attractive source of found money. Seniors can sell their policy for a higher amount then the cash surrender value, but less than the death benefit, giving them additional income to fund emerging needs such as healthcare and retirement needs
2. The reduction in estate tax liability resulting from ATRA 2012 is causing some senior clients to reconsider the amount of life insurance coverage that they really need. The secondary market has evolved to provide some attractive solutions to allow a partial sale of some of the benefit allowing the policy owner to retain a portion of the policy with no future premium payments.
3. Increasing costs of insurance premiums at a time of mounting healthcare costs may make the opportunity cost of holding a policy an unwelcome burden. Selling the policy for fair market value allows policy premiums and proceeds from the sale to be redirected to changing planning needs.
4. Parents that bought policies as a safety net in case of a spouse’s death may now have grown children that are financially independent. The policy is no longer an effective safeguard, and becomes a burden and a financial drain instead of a source of security. Uncovering the hidden value in this life asset could be a game changer and allow funding for other areas of their retirement plan.
5. In the case of a business, a policy is no longer needed because the business has been sold or liquidated. Term, Key-person, Buy/Sell, and others are lapsed for pennies on the dollar that could possibly be worth more than the business itself.
The Ashar Group serves as a strategic partner and specialist in the Secondary Market for Life Insurance Settlements. For more information, please visit www.ashargroup.com
People are living longer and pensions are becoming a thing of the past. The Life Settlement option has emerged as a viable option when it becomes clear to the adult-children or the senior that they are outliving their savings and in need of liquidity to maintain their lifestyle for years to come. Consider the facts: according to The Administration on Aging (AOA),people 65 years or older numbered 39.6 million in 2009. They represented 12.9% of the U.S. population, or about one in every eight Americans. By 2030, there will be about 72.1 million older persons,
more than twice their number in 2000.
It’s the perfect storm: more seniors than ever before are living longer and are worried about running out of money in their retirement years. That’s
why educated advisors are needed now more than ever to help seniors find additional sources of revenue to fund their retirement and health care needs. One of the most relevant and reliable sources of additional income for an aging population is the Secondary Market for Life Insurance.
A study from the Government Accountability Office concluded that a Life settlement offered seniors approximately 8 times more than the surrender value as opposed to just letting thelife insurance policy lapse. That’s additional income that can be used to fund long-term health care needs, retirement needs, or simply as a way to offset the costs of living on a fixed income while trying to keep pace with inflation.
So how do you know what a policy is worth? No different than other assets a person owns, policy owners can have it appraised or valued in the Secondary Market. While many seniors can benefit from a SMV®, Secondary Market Valuation, those who have health conditions that were developed after the policy was issued years ago, are the ones who benefit most. There are many reasons why advisors are telling their senior
clients who are looking for a way to enhance their retirement income to consider a life settlement payout. To see if your policy can qualify, talk to a Secondary Market Specialist at 800-384-8080 or visit ashargroup.com for more information.
get a secondary opinion®
It’s not unusual to hear about a policyholder who abandons or cashes in their life insurance policy without first checking for its fair market value. If they had appraised their policy, many would have found out that it could have been worth far more in the Secondary Market than what they received by simply letting the policy lapse or cashing it in with the insurance carrier that issued the policy.
Those familiar with the Secondary Market know that obtaining the best value for a life insurance policy doesn’t always come from the issuing company. Prudent advisors and their clients understand the importantance of appraising their policy to see what it’s really worth through ordering a Secondary Market Valuation, SMV®. This not only provides up to date information about the true fair market value of their policy, it also can mitigate liability for trustees and fiduciaries that might have unknowingly surrendered or lapsed policies for minimal value.
So what must an advisor and client do to ensure the best possible outcome? First, evaluate all options available to the client, including a life settlement. Next, work with a firm that is licensed to advocate on your client’s behalf. Their responsibility is to analyze the client’s probability of receiving an offer for their policy in the Life Settlement Secondary Market. They then guide the client and advisory team efficiently through the process and minimize potential pitfalls. A licensed broker, such as Ashar, is aligned with the client’s interests, will help to ensure that you follow all applicable compliance requirements, and we will negotiate with their established institutional funding relationships to secure the best offer possible for your client’s policy.
By following these steps, you’re helping to ensure that your client is being dutifully represented, while you protect your reputation and limit liability. If you have any questions about the Secondary Market, please call and speak with one of our Secondary Market Specialists at 800-384-8080.
get a secondary opinion®
As advisors first and foremost, we all want to serve with commitment and compassion in helping all parties involved in the consideration of a life settlement. That includes making it easy for advisors to learn about the secondary market, so you can help your clients make smart decisions, protect their independence and preserve their dignity. One of the best ways we can do this is giving open access to our Policy Value Quiz. It’s a quick 7-question screening tool that will help you and your clients determine if a life insurance policy may qualify for a Secondary Market Solution. At the end of the questionnaire, you will receive a total score and the probability of qualification.
Life Insurance is property, similar to other assets you own. If your client does decide to sell their policy in the secondary market, wouldn’t they want to know what it could be worth prior to taking it to market? Would they receive more for their policy than simply selling it back to the insurance company at a minimal value the carrier believes its worth? They would never just hand their home back to the bank without first checking its value on the open market, so why would selling your policy be any different? Are you Ready to take the quiz? Simply go to https://ashargroup.com/policy-value-questionnaire/.
There are many factors involved when making this big decision, but if other options aren’t readily available, a cash settlement in the secondary market can be a significant source of needed income. The Ashar SMV®, Secondary Market Valuation, can help you determine if your client’s policy has value beyond the cash surrender value. All types of policies can qualify, even Survivorships. When it comes to Term insurance, there is no cash surrender value but, there can often be considerable value uncovered by the Ashar SMV®. The same is true with underfunded Universal Life, Guaranteed UL policies, as well as second to die policies.
If you decide to sell a policy in the secondary market, an Ashar Secondary Market Specialist will help you and your client obtain the highest fair market value possible.
No matter what your scenario is, when it is time make any changes in a life insurance policy, make sure you get a determination of fair market value to help your client determine the most profitable alternative for their particular situation.
get a secondary opinion®
The Ashar Group’s team is widely considered one of the most respected and technically proficient in the industry. You’ll find our approach to the transaction process robust, abiding by all applicable state regulations and privacy requirements, while always protecting the best interest of the policy owner throughout the entire negotiation process. Review the following steps your clients will undergo when selling their policy, then call us at 800-384-8080 to speak to one of our specialists:
Step 1: Pre-screening. During the pre-screening process, basic medical and policy information is analyzed and the potential market value is estimated. If the estimated value meets the clients' expectations, the decision can be made to move forward.
Step 2: Underwriting — no exam required. The insured does not have to go to the doctor. Medical records of the insured are collected from the last five years and a current illustration is obtained. If any new developments are uncovered by underwriting, the case is reevaluated.
Step 3: Policy Pricing. Determine the potential value early and share the analytics to save time for all parties. Additionally your Ashar Secondary Market Specialist facilitates the process to decide which required third party underwriters to use and then completes an analysis to interpret the information to confirm accuracy.
Step 4: Agree on Listing Price. At this point in the process, the Secondary Market Specialist presents the range of offers to the advisor and explains the details and the relative strengths and weaknesses of the buyers including any alternatives.
Step 5: Negotiation And Offer Acceptance. Once the most suitable offer is selected, a Secondary Market Specialist like the Ashar Group negotiates any details. The offer is accepted in writing, bid transparency and contingencies are communicated, and negotiations close.
Step 6: Contract Signed. State approved contracts are issued and the Secondary Market Specialist assists the insured, policy owner and advisor in executing the documents.
Step 7: Settlement Delivered. Once the reviews and due diligence are completed, the lump sum to the policy owner is placed in a 3rd party escrow account, the change of ownership form is submitted to the insurance carrier and the seller receives the funds.
If you are in a position where you think it would be prudent to consider the benefits that the Secondary Market offers, talk to an Ashar Secondary Market Specialist at ashargroup.com.
get a secondary opinion®
As a trusted advisor, have you discussed alternative ways to fund long-term care (LTC) for your clients or their loved ones? With an aging population, the harsh reality is that a majority of Americans will need long-term care, assisted living, or homecare. Many clients in their 50-60’s cannot prepare for their own future as they’re forced to pay for the caregiving needs of their parents. Proactive decisions are pushed off and the cycle repeats itself.
Due to this unintentional, yet highly dangerous lack of planning, many families are unknowingly causing financial and emotional devastation to the multigenerational families for whom they care deeply. It is far to common for a client to call their advisor when they have an immediate long-term care need. At that point it’s typically too late. Failing to plan is planning to fail. At this point, they cannot qualify for long-term care insurance.
So what are the options? Why not try leveraging a Life Settlement to accomplish the goal?
By appraising and monetizing your client’s life insurance policy, you can enable clients to help fund their long-term care expenses and help give them find peace of mind. This frees up liquidity for the entire family which enables them to put the proper financial plan in place therefore allowing them to focus on what’s important, their family. For more information on funding Long Term Care through a Life Settlement, visit us at ashargroup.com.
The Secondary Market for Life Insurance is a global market with a variety of institutional investors. It’s primarily comprised of private equity firms, pension funds, hedge funds, reinsurers, and global banks. In a life-settlement transaction, a policyholder sells an existing life insurance policy to an institutional investor for a lump sum that is higher than the cash surrender value, but less than the full death benefit. The fund then becomes the new owner/beneficiary, pays the premiums, and collects the payout when the seller passes. Although this regulated and global Secondary Market has been around for over a decade in many forms, the awareness of this option is still in its infancy.
For those that are unfamiliar with the concept, similar planning strategies have benefitted consumers assigning their life insurance policies to a third party, such as donating a policy to a non-profit that will provide value when the insured passes. One of the key differences is that in the life settlement market the insured and policy owner receive a lump sum today, similar to a structured settlement or lottery buyout. This is commonly used to fund lifestyle and caregiving needs, many times relieving pressure for the adult-children that are caring for their loved ones, instead of doing the proper planning for their own situations.
There are unique situations when these two planning solutions are integrated for the consumer and the non-profit. There have been many situations where our team has been asked to collaborate with an advisor that works closely with a non-profit to value policies that have been donated to their cause. Far to often the policies do not perform as planned and premiums become due, which was never included as part of the initial gift. In situations such as these, the policies could be appraised for their fair market value and sold in the secondary market instead of lapsing the policies for minimal value, therefore providing significant liquidity to the non-profit for current needs. For example, our team was approached by a non-profit that had three $1M policies that they were going to surrender for less than $25K collectively. We represented the policy owner to value the policies and negotiated approximatly $900K that they were able to receive today to benefit their cause. Due to the life settlement option being available, thousands of individuals will benefit from the innovative advisor that we collaborated with to serve this non-profit.
As a reminder, due to privacy and regulatory concerns, it is critical to secure the services of a licensed and experienced broker to help facilitate the case design, presentation, negotiation and closing process.
If you are considering appraising or cashing in your policy, talk to a secondary market specialist at Ashar who can guide you through the process. You can also go to https://ashargroup.com/policy-value-questionnaire/ to help you determine if your policy may qualify for a life settlement.
get a secondary opinion®
They are both transferrable and that’s where the opportunity begins. If you no longer needed your home, you would sell it on the open market for its fair market value to a qualified buyer. It’s the same with Life Insurance and Annuities. We call this exchange the Secondary Market.
Like real estate, this regulated Secondary Market has generated a competitive bidding structure for institutional buyers to purchase policies from policy owners, generating immediate liquidity that can be used for retirement and healthcare needs.
Today, an informed consumer now understands that selling a policy for its fair market value may be a viable alternative if the situation is appropriate. Your client would never hand their house back to the bank or the original developer at an amount less than what they’d receive on the open market. The same applies to appraising and selling their life insurance policy. If you are in a position where you think your client can benefit from appraising their policy to uncover its Secondary Market Value, talk to a licensed advocate such as Ashar Group. You can also go to https://ashargroup.com/policy-value-questionnaire/ to take a short quiz to help you determine if a policy may qualify for an amount higher than the cash surrender value.
