How to Talk to Your Aging Parent about a Life SettlementA person’s financial situation and status may be one of the most sensitive subjects. Most adults intuitively understand that of the few subjects that are not “up for grabs” with their colleagues, their neighbors, their friends, and oftentimes even their closest relatives, personal finances tend to top the list.

To help us understand why this is and navigate “difficult conversations,” we can look to a model created by the Harvard Negotiation Project.

According the Harvard Negotiation Project, conversations tend to occur on three different levels. Depending on the level at which a conversation transpires, there is more or less likelihood that difficulty will arise. Conversations can occur on one level or on multiple levels including all three at once, from the least complex to most complex:

  1. The content level
  2. The emotional level
  3. The identity level

At the content level, we negotiate simple decisions between ourselves and another person. For example, our partner might suggest, “Let’s go out to eat tonight,” and we might respond, “I’d really like to stay in and eat dinner at home.”

If this conversation is taking place on the content level, we’re simply dealing with the face value of whether we do A or B, and we’ll usually reach a decision very quickly and easily: “That sounds just fine,” our partner cheerfully agrees. “We can go out another night.” Here, only the content, or whether or not we go out to eat, is at stake.

At the emotional level, there is a deeper emotional issue underlying the content, and difficulty is more likely to occur. When our partner suggests, “Let’s go out to eat tonight,” we might respond with, “We’ve gone out nearly every night this week. Can’t you see I’m stressed out and need to stay in?” Here, our feelings, and whether they are being considered, are at stake.

At the identity level, where underneath even the emotional level, our sense of ourselves as worthy of respect and having choice over our lives is at stake, difficulty is almost certain to occur. When our partner suggests, “Let’s go out to eat tonight,” we might respond with, “We’ve gone out nearly every night this week! I don’t know why things have to always be your way! Why can’t we just do what I want more often?! It’s like you don’t trust me to make decisions!” Here, our sense of identity, or whether we have the power to make choices, and how we want to see ourselves and how we want other people see us, are at stake.

When it comes to money matters, a person’s financial status is almost always intimately related to both their basic sense of security and, with few exceptions, to their sense of identity.

For this reason, when you approach your aging parent about their personal finances, particularly if their situation is insecure or in question, a high level of sensitivity is called for.

If your parent owns a life insurance policy and is facing urgent-care expenses or other pressing needs for which their financial reserves are inadequate, the possibility of a life settlement may be an important subject to discuss with them.

A life settlement involves the sale of your parent’s life insurance policy to a licensed institutional buyer for more than the policy's cash surrender value but less than the net death benefit. Life settlements are paid in cash to the policy seller in a lump sum allowing your parent generate needed liquidity from their life insurance policy and use the lump sum for anything.

Through a conversation with your parent, you may find that their policy has become prohibitively expensive and thus is in danger of lapsing, presenting the possibility that if they sell the policy, it may cease to be a financial burden and instead become a financial boon.

If you need to have a potentially difficult conversation with your parent about their personal finances, and you broach the subject of a life settlement, proceed with the following in mind:

  • Set the tone. Approach your parent with an attitude of care and confidence rather than anxious concern.
  • “Knock before entering.” Let your parent know you’d like to have a conversation with them about their personal finances and to explore some options without them needing to make any immediate decisions about these options. Ask them directly if they’re open to this conversation and whether they have any concerns about it.
  • Listen. It’s very unlikely that your parent will give you a simple yes or no and leave it at that. Give them space to speak. Listen to how they feel and empathize with any concerns they may have.
  • Allow them to set the parameters. If your parent is open to the conversation, ask them when and where they’d like to have it, and if there’s anyone else they’d like to have present or to exclude.
  • Affirm their right to choose. When it comes time to have the conversation, affirm that you respect your parent’s right to move forward in whatever way feels right for them, and that the point of the conversation is to determine the best way to do so.
  • Ask clarifying questions. Look for opportunities to inquire deeper into and further explore what your parent is sharing with you, continuing to listen and empathize.
  • Reflect your “takeaways” from the conversation. In every conversation, there is a particular point that we want the other person to understand. Identify the most important points of the conversation, and verbally reflect these back to your parent in your own words to ensure they feel heard and understood and that you’re both on the same page.
  • Discuss next steps. Now that you’ve had an exploratory conversation about the possibility of a life settlement, the next steps would be to consult a secondary market and valuation specialist in order to conduct due diligence into whether this is the right choice for your parent.

Ashar Group’s team of experts is trained to carry the conversation forward by asking and answering crucial questions that will help you and your parent make an informed decision.

Though a life settlement isn’t right for everyone, the team at Ashar Group adheres to the strictest of ethical standards in determining what will best serve your parent, assisting them in confidently taking the next step toward a more secure future.