get a secondary opinion®
Every year a staggering number of senior life policy owners lapse or surrender their unneeded or underperforming life insurance policies without first checking for fair market value. A 1911 Supreme Court Decision, Grigsby v. Russell viewed life insurance as private property whose owner has all of the rights and privileges possessed by other forms of property. The owner has the right to assign or sell the policy. Unfortunately, most senior policy owners are not aware of the benefits of the life settlement market. According to the Insurance Studies Institute, 90% of seniors who lapsed a life insurance policy would have considered a life settlement had they been aware of the possibility.
Think about it:
• Would anybody throw a lottery ticket in the garbage without first checking to see if it had any value?
No! They would check for value first.
• Would you sell your house to a stranger who knocked on your door and offered you more than you thought it was worth?
No! You would get your house appraised to find out if it was worth more.
• Would you abandon your life insurance policy without first checking for fair market value?
Unfortunately, for most people, the answer would be YES! And ………….
when there is a FIDUCIARY involved, then that would definitely be a No No!
Under the right circumstances, uncovering the fair market value of a life insurance policy can be a game changer and provide a significant amount of “found money”.
Who is your client listening to? No different than other markets, there are companies trying to disintermediate fiduciaries and planners. They are aggressively advertising direct to your clients about receiving cash for their life insurance policy. If they’re successful in their quest, then your clients could be left without representation, vulnerable, and not treated in good faith.
Here’s what they could expect to hear. They promise your client something called “fair value”. It’s a subtle play on words with huge implications that could mislead your unsuspecting client into thinking they will get a good result. By communicating directly with your client, this strategy can be very profitable for them, not necessarily the client. Consequences can be long-term such as compromising the client’s existing financial plan and even introducing new products and services that aren’t suitable. The client is misled because they really think that they are getting a “fair value” because they received more than the cash surrender value, and as a bonus, eliminated intermediary fees. What could be better? Truth be known, they could have left as much as 800% or more of additional value on the table because they were dealing with a source that has a fiduciary responsibility to the fund they represent, not the consumer. If you were selling your house, would you like one offer or multiple offers to drive up the amount to your family? The same is relevant to selling your life insurance policy.
An additional downside for the client is not being duly represented. If a client were involved in a real estate transaction, they would hire a real estate broker or real estate attorney. The same process is true for many other transactions. Why would this be different? It’s always important to have an advocate on your team that knows where the potential landmines are located and the value can be identified. That’s why an experienced and independent life settlement brokerage firm becomes involved. This process can be complex. It’s critical to have a partner that has stood the test of time and can navigate the settlement process, saving the client time and money.
How do you protect yourself and your clients from this potential misrepresentation and misalignment? Here are few key questions to ask:
1. Is the broker or provider purchasing this policy for their own portfolio?
2. Do they have a fiduciary duty to the purchaser or to the client?
If the answer to either one of these first to questions is yes, then your clients’ need you to step in and represent them. The offer they would receive without your intervention would be heavily in favor of the buyer and not in your clients’ best interest. Also make sure the buyer is telling you the truth by asking them to respond in writing with these direct questions:
a. Will they rep and warrant that they do not have any ownership interest in the purchase of the policy?
b. Will they rep and warrant that they have no stake in the firm buying the policy?
3. Are they using the term “fair value” or fair market value? If they tell you that they obtain fair market value, then MAKE THEM PROVE IT! Ask the following questions:
a. Are they seeking multiple bids from several different institutional buyers? If not, then your client may not get what they deserve and could potentially be leaving as much as 800% or more of additional value on the table.
b. Are they being transparent? Will they provide a list of regulated licensed buyers and detailed bids? If they can’t or won’t do this, then that’s a big red flag.
Fiduciaries and planners that follow life settlement best practices always use an independent full service life settlement broker to design the case and manage a competitive bidding process that results in their clients receiving fair market value. Then, and only then are the best interests of your clients being served.
If your client is in a position where you think it would be prudent to consider alternatives, talk to a secondary market specialist. 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.
Especially in a time where health costs are higher than ever, pensions are becoming a thing of the past and the financial stress still lingers in the investment accounts of Americans approaching their retirement years.
The Secondary Market has taken off over the last decade, generating billions to consumers through the surrender value of their policy. Right now, $92 Billion worth of Term policies are available on seniors aged 65 and older. These are policies that could be worth a large sum of money in the Secondary Market, and could make the difference between living with dignity and merely existing for many senior citizens.
To explore the benefits of the Secondary Market, seniors can get a SMV®, Secondary Market Valuation, on their policies through their advisors. With an SMV®, advisors have valuable information about the fair market value of a policy, information that can help clients who are facing fixed incomes or less aggressive investment decisions make informed decisions regarding financial challenges.
If you think your client is in a position where a SMV could provide a better outcome, talk to a secondary advisor at 800-384-8080. 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.
get a secondary opinion®
A new life settlement option has been developed to assist senior clients who have an immediate need of long term care. It applies to nursing home care, home skilled nursing care, assisted living, and hospice. This long term care (LTC) benefit program is an approved Medicaid spend down and allows the sale of a life insurance policy rather than forcing someone applying for Medicaid to surrender their life insurance. Funds from the sale of the policy are placed in an irrevocable trust to begin immediate payout for LTC monthly expenses. This program is gaining in popularity as Legislators see it as a good way to control Medicaid costs.
For adult children who are caring for their parents at home rather than putting them in a nursing home, this program can help keep them from having to dig into their own retirement or education funds in order to care for a parent. This is not long term care insurance because this program is only applicable for clients in need of LTC right now. It is a timely option for those that did not plan ahead by getting insurance but still need some financial assistance.
As needs for better standards of living arise for seniors who have outlived their retirement income, who are straining family budgets or who weren’t prepared for increased costs associated with long-term care, alternatives like the long term care benefit program, have been a valuable and life-saving solution for advisors — helping them support families with aging parents.
Talk to a Secondary Market Specialist at 800-384-8080 or visit ashargroup.com for more information on this emerging market.
Is Life Insurance Your Client’s Greatest Asset? A life insurance policy can have a monetary value on the Secondary Market that far outshines its cash surrender value. Using a SMV®, Secondary Market Valuation, can help you determine the actual fair market value of a policy for your client. And finding previously unknown monetary value not only will elevate your worth in your client’s eyes, it can minimize potential liability if a policy lapses or is surrendered for minimal value. Here’s a compelling example.
A 74-year-old male was retiring from his business and had a $1 million Term policy that was still convertible to Universal Life. In looking at his overall plan, the policy was listed at $0 on the balance sheet and the client didn’t realize the policy could have value in the secondary market. With an annual premium of $35K and a life expectancy of approximately 10 years, his was able to appraise and sell this policy for $175K in the Secondary Market. The found money was used to fund retirement and long term care needs.
With a little due diligence on an advisors part, a Life Settlement can become one of the biggest assets in their clients’ overall plan, not to mention a great way to enhance the relationship between advisor and client.
To take the first steps in determining if a policy may qualify for a life settlement, go to https://ashargroup.com/policy-value-questionnaire/. It only takes a minute, and it could help save your clients thousands.
People are living longer and pensions are becoming a thing of the past. The Life Settlement option has emerged as a viable option when it becomes clear to the adult-children or the senior that they are outliving their savings and in need of liquidity to maintain their lifestyle for years to come. Consider the facts: according to The Administration on Aging (AOA),people 65 years or older numbered 39.6 million in 2009. They represented 12.9% of the U.S. population, or about one in every eight Americans. By 2030, there will be about 72.1 million older persons,
more than twice their number in 2000.
It’s the perfect storm: more seniors than ever before are living longer and are worried about running out of money in their retirement years. That’s
why educated advisors are needed now more than ever to help seniors find additional sources of revenue to fund their retirement and health care needs. One of the most relevant and reliable sources of additional income for an aging population is the Secondary Market for Life Insurance.
A study from the Government Accountability Office concluded that a Life settlement offered seniors approximately 8 times more than the surrender value as opposed to just letting thelife insurance policy lapse. That’s additional income that can be used to fund long-term health care needs, retirement needs, or simply as a way to offset the costs of living on a fixed income while trying to keep pace with inflation.
So how do you know what a policy is worth? No different than other assets a person owns, policy owners can have it appraised or valued in the Secondary Market. While many seniors can benefit from a SMV®, Secondary Market Valuation, those who have health conditions that were developed after the policy was issued years ago, are the ones who benefit most. There are many reasons why advisors are telling their senior
clients who are looking for a way to enhance their retirement income to consider a life settlement payout. To see if your policy can qualify, talk to a Secondary Market Specialist at 800-384-8080 or visit ashargroup.com for more information.
get a secondary opinion®
The Ashar Group’s team is widely considered one of the most respected and technically proficient in the industry. You’ll find our approach to the transaction process robust, abiding by all applicable state regulations and privacy requirements, while always protecting the best interest of the policy owner throughout the entire negotiation process. Review the following steps your clients will undergo when selling their policy, then call us at 800-384-8080 to speak to one of our specialists:
Step 1: Pre-screening. During the pre-screening process, basic medical and policy information is analyzed and the potential market value is estimated. If the estimated value meets the clients' expectations, the decision can be made to move forward.
Step 2: Underwriting — no exam required. The insured does not have to go to the doctor. Medical records of the insured are collected from the last five years and a current illustration is obtained. If any new developments are uncovered by underwriting, the case is reevaluated.
Step 3: Policy Pricing. Determine the potential value early and share the analytics to save time for all parties. Additionally your Ashar Secondary Market Specialist facilitates the process to decide which required third party underwriters to use and then completes an analysis to interpret the information to confirm accuracy.
Step 4: Agree on Listing Price. At this point in the process, the Secondary Market Specialist presents the range of offers to the advisor and explains the details and the relative strengths and weaknesses of the buyers including any alternatives.
Step 5: Negotiation And Offer Acceptance. Once the most suitable offer is selected, a Secondary Market Specialist like the Ashar Group negotiates any details. The offer is accepted in writing, bid transparency and contingencies are communicated, and negotiations close.
Step 6: Contract Signed. State approved contracts are issued and the Secondary Market Specialist assists the insured, policy owner and advisor in executing the documents.
Step 7: Settlement Delivered. Once the reviews and due diligence are completed, the lump sum to the policy owner is placed in a 3rd party escrow account, the change of ownership form is submitted to the insurance carrier and the seller receives the funds.
If you are in a position where you think it would be prudent to consider the benefits that the Secondary Market offers, talk to an Ashar Secondary Market Specialist at ashargroup.com.
get a secondary opinion®
As a trusted advisor, have you discussed alternative ways to fund long-term care (LTC) for your clients or their loved ones? With an aging population, the harsh reality is that a majority of Americans will need long-term care, assisted living, or homecare. Many clients in their 50-60’s cannot prepare for their own future as they’re forced to pay for the caregiving needs of their parents. Proactive decisions are pushed off and the cycle repeats itself.
Due to this unintentional, yet highly dangerous lack of planning, many families are unknowingly causing financial and emotional devastation to the multigenerational families for whom they care deeply. It is far to common for a client to call their advisor when they have an immediate long-term care need. At that point it’s typically too late. Failing to plan is planning to fail. At this point, they cannot qualify for long-term care insurance.
So what are the options? Why not try leveraging a Life Settlement to accomplish the goal?
By appraising and monetizing your client’s life insurance policy, you can enable clients to help fund their long-term care expenses and help give them find peace of mind. This frees up liquidity for the entire family which enables them to put the proper financial plan in place therefore allowing them to focus on what’s important, their family. For more information on funding Long Term Care through a Life Settlement, visit us at ashargroup.com.
get a secondary opinion®
They are both transferrable and that’s where the opportunity begins. If you no longer needed your home, you would sell it on the open market for its fair market value to a qualified buyer. It’s the same with Life Insurance and Annuities. We call this exchange the Secondary Market.
Like real estate, this regulated Secondary Market has generated a competitive bidding structure for institutional buyers to purchase policies from policy owners, generating immediate liquidity that can be used for retirement and healthcare needs.
Today, an informed consumer now understands that selling a policy for its fair market value may be a viable alternative if the situation is appropriate. Your client would never hand their house back to the bank or the original developer at an amount less than what they’d receive on the open market. The same applies to appraising and selling their life insurance policy. If you are in a position where you think your client can benefit from appraising their policy to uncover its Secondary Market Value, talk to a licensed advocate such as Ashar Group. You can also go to https://ashargroup.com/policy-value-questionnaire/ to take a short quiz to help you determine if a policy may qualify for an amount higher than the cash surrender value.
Prior to the emergence of the Secondary Market, advisors had few options to offer clients when they were deciding whether to surrender or lapse a policy. Fortunately, the Ashar Group offers advisors a free online tool called the Policy Value Quiz. It is designed to help you determine in a timely manner if your client’s policy could qualify for a Secondary Market solution. This can be a terrific way to ensure that your client is not “leaving money on the table,” prior to surrendering or lapsing a life insurance policy for it’s cash surrender value. It can position you as the innovative advisor that assisted the client in generating short-term liquidity to fund lifestyle and healthcare needs.
Once you’ve qualified a policy and want to learn more, you can partner with Ashar Group as your Secondary Market resource to learn more about how to serve your clients, discuss this life-changing solution with your professional network that can impact your bottom line in a positive way. Ashar has developed a proprietary tool, our Advisor Resource Center. Here you’ll find valuable tools and case studies for reference. It also includes training videos that will guide you through the process and help you better understand the life settlement market. Learn the answers to many of the complex questions that could come up in your discussions. It all starts with education and training, to provide you the support you need to uncover new opportunities for your clients and business.
If you have any questions about these resources that need further clarification, please email us at ashargroup.com or call us at 800.384.8080. We’re here to help.
