There comes a time for anyone with a life insurance policy to make the decision to surrender the policy to the insurance carrier or sell it on a secondary market. There are many factors involved when making this big decision, because a large amount of money could hang in the balance.
Historically clients have always had their assets and property appraised. Would a client ignore valuable real estate, artwork, or jewelry?
Life insurance policies are both assets and property that may have a Secondary Market Value that greatly surpasses the cash value. How will the client know what it’s really worth if they do not have it appraised? Would there be liability if a policy was surrendered or lapsed that had a Secondary Market Value of 10-20-30% of the overall death benefit? What if their life policy was being transferred for fair market value? How would you determine that value?
The Ashar Group’s proprietary SMV® (secondary market valuation) process determines that value for you and your client.
Operating within the trust and estate planning markets can be complex. The need to consistently monitor and rebalance the components of a client’s overall plan can involve collaboration among many professionals and multiple disciplines.
As a starting point, get a secondary opinion® of the potential value of your client’s policy at https://ashargroup.com/quiz/
To fund or not to fund, that is the question. Policies owned in Irrevocable Life Insurance Trusts account for over 50 percent of the policies we review at Ashar Group. The statistics are staggering regarding the amount of insurance in trusts that have been ignored or underfunded. A common scenario we encounter is an underperforming life insurance policy that suddenly needs premiums or it could be in danger of lapsing. This results in an expedient exercise to decide what to do next - to fund or not to fund. (more…)
Clients rely on trusted professionals to provide objective guidance and recommendations. Many times you are required to make decisions that are in your clients' best interests during an emotional time in their life. We understand the importance of serving your clients, protecting your reputation, and growing the assets of all parties.
Prior to a regulated and transparent Secondary Market, there were limited options when determining how to value, transfer, or exit a client's life insurance policy. The Institutional Secondary Market has shifted that paradigm and changed the conversations with clients. More advantageous options may exist to not only protect the wealth of a client, but to grow it beyond one generation. By simply integrating the SMV®, secondary market valuation, into your practice, opportunities to generate significant and short-term liquidity may become possible. Our job as Secondary Market Specialists is to provide peace of mind so that advisor and their clients can make their own decisions about what is best for their future.
get a secondary opinion® of the potential value of your client’s policy. Click the link below.
At Ashar Group, our objective is to protect the interest of all parties throughout the settlement process. We believe that advisors need to be confident they are associated with a partner that fully understands the complexities they face today, both legally and ethically.
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As a secondary market best practice – Know who you are dealing with and whom they represent. Here is a quick overview of who does what in the Secondary Market Process:
Insured/Policy Owner – First, of course, is the person or entity that has a policy that they want to sell. They have all the rights by law granted to them as the policy holder. For example, they have the right to sell their policy to another entity who would then become the owner and pay all future premiums.
Financial Advisors/Producers – These are the advisors to the policy owner, such as their insurance agent, accountant or an attorney who might, on behalf of the insured/owner, contact a life settlement broker.
Settlement Broker– This is the secondary market partner who helps the client’s advisor find the best secondary market value for the client. These firms are required to be licensed in 90%+ of states, advocate for the seller and advisor, and have in-depth knowledge of the current purchase parameters and which institutional funds are bidding most actively. A life settlement broker represents you and your client, and creates competition to drive the best offer for the client. Brokers are not the buyers of the policy.
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It’s an undeniable fact that an overwhelming number of life insurance polices never pay a death claim. Policy owners pay years of premium and then abandon a policy for pennies on the dollar. These lost opportunities should not be happening today because of the many options offered by the secondary market. A life settlement offers options for a policy holder to obtain much needed funds. Life settlement options can provide funds for mounting health care costs, reduce a large premium that that has become unaffordable, or merely receive a greater benefit for a policy that is no longer needed. Additionally, in the U.S. as with other products in the insurance industry, selling insurance policies in the secondary market is regulated and supervised at the state level.
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As clients get near the end of their policies, many factors begin to come into play. Changing investment needs may not allow time for their universal life policy to mature. Or they no longer need their term life insurance policy, or they just want to redirect premium payments and any cash available from their policy to new investment opportunities. Whatever the reason, a life policy settlement can help your clients maximize their retirement income by recouping premiums or realizing a substantial payout from the secondary market for their life insurance policy, even their term policy.
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.
Trust owned life insurance (TOLI) has been a subject of much concern since the mid-90’s when the Uniform Prudent Investor Act (UPIA) came on the scene. As a result, a new cottage industry of policy review companies sprung up overnight to take on the delegated responsibility of review and reporting. Life Insurance is a complex asset to manage and to do it as a prudent investor would.
