As infrequent as this scenario may sound, it is far more common than your might think— the unsuspecting policy owner who abandons or cashes in their life insurance policy without first checking for SMV®, secondary market value. And for a good percentage of the time, these abandoned policies were rich in “hidden value” that was left undiscovered.
Many cases are brought to Ashar Group by savvy attorneys, CPAs, and Trust Officers who have a good understanding of the monetary benefits that the secondary market offers for life insurance. They understand that the SMV® of life insurance can enrich the lives of clients and mitigate liability and reputational risk for the advisors involved.
Here is one incredible example:
A huge TOLI Life Settlement was paid to an 81-year-old female with the following circumstances: She had been told at the time of her $3M Universal Life policy purchased in 1988 that her policy would have a double-digit internal rate of return. This did not happen and in the fall of 2013, the insurance carrier notified her that premiums would increase by $150K annually if she wanted to keep the policy in force.
The Trustee was her nephew who had not monitored the cash values, and as a result, the policy was underfunded with only $48K cash surrender value remaining. With other life insurance to protect her estate, she was going to surrender her policy for retirement income until her attorney suggested that she first get an appraisal of their policy through a SMV®, Secondary Market Valuation. Instead of surrendering the policy for the $48,000 cash surrender value, she completed a life settlement and received a lump sum payment of $1,100,000.
The sobering truth is that If her attorney had not encouraged an analysis of secondary market value, she would have unknowingly left over $1 Million on the table— which could have made the advisors or trustee liable for this oversight or at least cause them serious reputational risk. get a secondary opinion® of the potential value of your client’s policy at https://ashargroup.com/quiz/