What is the big deal with big data? The overwhelming amount of data now available, and the progressively complicated technology that comes with it, have not only transformed our lives, but also the way industries function and compete. That can mean massive changes for the way advisors interact with their clients.
With over 2.5 quintillion bytes of data created daily, the time has come to figure out how best to collect, process, and analyze this data to better serve clients.
Senior life insurance policy owners are rapidly lapsing or surrendering their policies for minimal value causing them to throw away decades of premiums.
One of the many questions that financial advisors often get about selling one’s life insurance has to do with the difference between viatical settlements and life settlements.
There’s a lot of confusion about these two transactions. To help clear up that confusion, here’s a brief explanation of viatical vs. life settlements. (more…)
Average life expectancy in the US took a drastic 1-year plunge during the first half of 2020 due to Covid-19. Historically, overall life expectancy has dropped only 3 times since 1860 attributable to the Civil War, the First World War, and the Spanish Flu epidemic. According to the CDC, heart disease and cancer have long been the leading causes of death in the United States and still hold the top 2 spots with 659,041 and 599,601 deaths respectively in 2020. Covid-19 is threatening to eclipse both of those numbers.
Making the shift from working life, to retirement life, can be a shock for even the most confident retirees. Even if you have saved your entire working life, financial stress can still creep up. Fortunately, there are many relatively easy ways that retirees - and near-retirees - can improve their finances.
Life insurance is one of the most valuable assets owned by consumers; however, it is also one of the most misunderstood when it comes to its present asset value. A life settlement is the sale of an existing life insurance policy (an asset) for an amount greater than the cash surrender value, and less than the death benefit. This timeline will demonstrate how life settlements have evolved from insurable interest abuses by less compliance-centric companies, to a valuable planning tool to help financial professionals and fiduciaries protect the best interest of the policy owner/seller.
What is a life settlement?
A life settlement is the sale of an existing life insurance policy to an institutional buyer for an amount greater than the cash surrender value and less than the death benefit. A life settlement provides a lucrative alternative to lapsing or surrendering the policy.
Did you know that life insurance is considered an asset? As such, it has the same legal rights as your other assets - including appraising and selling. Similar to selling your home, depending on the number of interested parties, offers can be more competitive to drive up value.
Life insurance is typically purchased when a major life event happens, such as getting married, buying a house, or having children. The purpose of life insurance is to provide a lump sum payout in the amount of the death benefit, or face amount, for bills and other necessities in the event of an untimely death. It can also be used as a way to pass wealth from one generation to the next.
Every month, quarterly, semi-annually, or annually, you make a premium payment that keeps the policy active. These premiums serve to pay the cost of insurance, or what it costs the carrier for your insurance. For some policy types, a set amount of money gets paid into the policy until a certain age or date.
So, what happens when a policy owner wants to exit the policy? For permanent life insurance (Whole Life, Universal Life, Guaranteed Universal Life, Indexed Universal Life, and Variable Universal Life), cash builds up in the policy as premiums are paid. This is called the cash value. One option is surrendering the life insurance policy to the carrier for the cash surrender value (CSV). The CSV is often referred to as the carrier purchase value. The CSV is much lower than the policy’s fair market value.
There are other interested parties in purchasing your life insurance beyond the insurance carrier. Institutional buyers, such as state pension plans, private equity, asset managers, endowment funds, and others, purchase policies as a diversified asset class. Many of these firms have a buyer who directly represents them and their interests. These buyers advertise to consumers with the goal of purchasing their policy for more than the CSV but less than the fair market value.
Buyers have a duty to the funds they represent to ensure the buyers' best interests are protected. This means purchasing the policies at a lower rate, so the fund has a higher rate of return. To achieve a high rate of return, the offer to the policy owner must be lower than the fair market value.
The final purchase price for a life insurance policy is the broker-negotiated auction value, or the fair market value. Using a broker, policy owners often receive 8 - 12 times more than the CSV. But how do brokers achieve such high offers?
As a life settlement broker, we use our proprietary auction platform to generate multiple bids for each policy from various funds. Through this process, our clients receive bids that far exceed those of the other two possible values. For example, we recently helped a 90-year-old family matriarch sell her policy.
At Ashar Group, we specialize in securing fair market value for our clients. To learn more about the possible value of your life insurance policy, take our policy value quiz or contact us today.
Ashar Group is a nationally licensed life settlement firm that protects 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.
According to a research study from the Consumer Bankruptcy Project, the rate of seniors facing bankruptcy has surged five-times-over since 1991. This spike exceeds the demographic shift for the aging population. The report analyzed data across states from bankruptcy court records and written questionnaires, revealing that about 12.2 percent of annual bankruptcy filings are from senior households.
As a financial professional, your job is to protect your clients’ best interests. Safeguarding assets, evaluating investment options, and advising on savings goals are part of being a financial professional. But senior clients have a unique set of financial vulnerabilities, many of which require a good deal of tact and sensitivity when addressing. Here are four effective ways to protect senior client finances and provide the best value possible.
