For a client considering a Life Settlement, they trust their advisor to serve their best interest. When seeking a life settlement that means a responsibility to obtain the best value for their client with their policy. This is not to be taken lightly, because when clients are looking to a Life Settlement, it is usually due to such factors as paying for mounting health care costs or trying to reduce a large premium that the client can no longer afford and is eating into their retirement savings.
Because of the importance of receiving the highest amount possible, advisors usually turn to a secondary market specialist, who is qualified to find and accept multiple bids to determine the best settlement possible. In turn, due diligence on the part of the secondary market specialist helps protect and enhance the relationship with the client’s advisor. Working together, these advisors now give the client leverage to either sell the policy for an amount much higher than the surrender value or have the option to retain some coverage in the policy with no future payments.
Using a life settlement broker can mean the difference between leverage and litigation: In other words, not checking to uncovering payments significantly exceeding surrender values can lead to lawsuits against the advisor if these options are discovered by another party. Consider this:
- A woman was going to surrender her policy for the $48,000 cash value, because the person handling her trust did not explore the secondary market. Her lawyer however, was familiar with the benefits of the secondary market. In the end, she completed a life settlement and received a lump sum payment of $1,100,000.
With the emergence of the Secondary Market, the potential for a policy to be sold and generate immediate cash flow makes it a serious consideration for advisors who are exploring the best alternative for their clients.
Whatever the reason, prior to the emergence of the Secondary Market, policy owners didn’t have most of these options available to them when surrendering or letting their policy lapse. While traditional exit-strategies are smart choices in some circumstances, the potential for a policy to be sold on the Secondary Market that can generate immediate cash flow makes it an attractive alternative for advisors and their clients.
If you are in a position where you think it would be prudent to consider alternatives, talk to a secondary advisor. You can also go to https://ashargroup.com/policy-value-questionnaire/ 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 save your clients thousands.