As a fiduciary, you protect your client's best interests, which means that you present to them all the available 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. By not discussing your client's life insurance and the possibility of a life settlement, your client could be missing out on liquidity that could be used for planning needs. 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.
A life settlement is the sale of an in-force life insurance policy to a licensed institutional buyer for a sum that is more than the cash surrender value and less than the death benefit. The life settlement market started in 1911 when the Supreme Court ruled that life insurance is 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. We have seen clients use the money to fund other aspects of planning, pay for long-term care, or add to retirement accounts.
Over time, the need for life insurance coverage naturally changes. While life insurance can sometimes be the largest asset a client owns, it’s rarely reviewed for fair market value like other assets. This results in clients making uninformed decisions, missing lucrative planning opportunities, and paying unnecessary premiums.
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 who has a fiduciary duty to protect your client, the policy owner and uses a competitive bidding process to ensure the client receives fair market value for their policy.
Ashar Group is a nationally licensed life settlement firm that acts as a fiduciary to protect 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, management assets, or purchase policies. We are an independent resource for fiduciary advisors and their clients specializing in life insurance valuation for planning purposes. Contact us today to see if a life settlement is right for your client.
This 3-minute questionnaire will help us give insight into whether a policy has life settlement value. If the option is chosen, our proprietary auction platform ensures the best offer for the policy.
Their needs had changed, and they no longer needed the policy
They were able to uncover significant liquidity and fund their retirement.
Policy was underfunded and sitting in an ILIT
Eliminated future premium payments and used the funds for medical bills.
Policy was no longer needed for estate planning
Client was able to fund all lifestyle and caregiving needs.