As a fiduciary, you protect your client's best interests, which means that you present to them all the options that will allow them to achieve their goals. A life settlement is a legal right in all 50 states, yet it is often overlooked by many advisory teams when conducting annual reviews and asset planning. However, by not discussing your client's life insurance and the possibility of a life settlement, you could be leaving your client vulnerable to predatory practices used by many in the industry. By having proactive conversations with your senior clients about life settlements, you can be sure their interests are protected and build a defensible body of work.
What is a life settlement?
A life settlement is the sale of an in-force life insurance policy to a licensed, institutional buyer for a sum less than the death benefit and more than the cash surrender value. The life settlement market started in 1911 when the Supreme Court ruled that life insurance is considered an asset, just like your home or a piece of art. Since then, life settlements have become a legal right in all 50 states, with 90 percent of the population living in regulated states. The value created from a life settlement can be used in any way the policy owner wishes. At Ashar Group, we have seen clients use the money to fund other aspects of planning, fund long-term care, or make memories with loved ones.
How does a life settlement protect the client's best interests?
New York Regulation 187 states, "recommendations must be in the best interests of the consumer." There are many situations in which a policy owner no longer wants, needs, or can afford their life insurance policy. In this instance, the insured may wish to surrender their policy back to the carrier for the cash surrender value (CSV) or explore other nonforfeiture options. However, a life settlement often creates value that is 6-12 times the CSV.
The best practice for conducting a life settlement is to use a life settlement broker, such as Ashar Group, who represents your client in the marketplace. Ashar Group specializes in creating a competitive bidding process among licensed institutional buyers to ensure the client receives fair market value for the policy. This proprietary auction process allows us to have the title of "Life Settlement Fiduciary."
Ashar Group is dedicated to helping our clients receive fair market value for their life insurance policies. Contact us today to see if a life settlement is right for you.