Fiduciaries can take some preliminary steps to identify at-risk clients, starting with asking clients three questions that will help them quickly uncover who may
Two provisions in the 2017 Tax Cuts and Jobs Act, the doubling of the estate tax exemption and more favorable tax treatment for the policy owner selling their policy, are the reasons the life settlement community is excited about the Act.
Life insurance has long been considered a hard
to value asset. Practitioners and planners have
dealt with a variety of definitions of fair market
value (FMV), depending on the particular application
that’s being addressed.
Similar to appraising real estate, we use current market data to determine if a life insurance policy has any value beyond the cash surrender value if sold today. The sum created from a sale of the policy can be used however the insured sees fit, including funding long-term care, medical costs, and more.
It’s not unusual to hear about a policyholder who abandons or cashes in their life insurance policy without first checking for its fair market value.. If they had appraised their policy, many would have found out that it could have been worth far more in the Secondary Market than what they received by simply letting the policy lapse or cashing it in with the insurance carrier that issued the policy.
Those familiar with the Secondary Market know that obtaining the best value for a life insurance policy doesn’t always come from the issuing company, and having a Secondary Market Valuation, SMV®, not only provides up to date information about what the policy is worth, it also can mitigate liability for trustees and fiduciaries that might have unknowingly surrendered or lapsed policies for minimal value.
The results can be life-changing and provide liquidity for retirement, caregiving, and lifestyle needs.
So what must an advisor and client do to ensure the best possible outcome? First, evaluate all options available to the client, including a life settlement. Next, work with a firm such as Ashar that is licensed to advocate on your client’s behalf. Their responsibility is to analyze the client’s probability of receiving an offer for their policy in the Life Settlement Secondary Market and guide the client and advisory team efficiently through the process, while minimizing potential pitfalls. A licensed broker, such as Ashar, is aligned with the client’s interests and will negotiate with their established institutional funding relationships to secure the best offer possible for your client’s policy. The goal is to facilitate a formal negotiation between institutional buyers and obtain multiple offers through this competitive bidding process.
By following these steps, you’re helping to ensure that your client is being dutifully represented, while you protect your reputation and limit liability. If you have any questions about the Secondary Market, please call us at 800-384-8080.
The Secondary Market for Life Insurance is a global market with a variety of institutional investors. It is comprised of private equity, pension funds, reinsurers and global banks. In a life-settlement transaction, a policyholder sells an existing policy for an amount higher than the cash surrender value, but less than the death benefit. The new owner pays the premiums and collects the death benefit when the insured passes. This is a win-win for both parties. Similar to a structured settlement or lottery buyout, the consumer receives a lump sum today and the institutional investor, such as the pension plan, can meet their future obligations.
Due to the complexities of the transaction, it is imperative to secure the services of an experienced and knowledgeable licensed broker to facilitate the case design, negotiation and closing process.
If you are considering valuing your policy, talk to a secondary market advisor such as Ashar Group who can guide you through the process. You can also go to https://ashargroup.com/policy-value-questionnaire/ to help you determine if your policy may qualify for a life settlement.
Does your insurance policy qualify for a Secondary Market Solution?
Take our policy value quiz and find out. [TAKE THE QUIZ]
The Secondary Market has become a safe and regulated environment for policy owners to liquidate insurance policies that are no longer necessary due to changes in estate tax law.
Many people are looking for new ways to enhance their current financial plan, and one new alternative is the Term Transformer.
This unique opportunity offers an alternative for your clients who have a convertible Term Life Policy that is about to be surrendered or lapse. The Term Transformer is designed as a simple and effective way to convert a term policy into a cash settlement.
With an increasingly aging population, the Secondary Market’s ability to quickly generate liquidity from unneeded insurance policies is becoming more relevant each day.
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 the policy when helping clients make informed decisions regarding financial challenges.
The Secondary Market has changed the way we think about life insurance and planning, and cannot be overlooked for a family, individual or business entity who are contemplating any change in a life insurance policy. Before the emergence of the Secondary Market for life insurance, individuals with impaired health were unable to receive additional consideration above and beyond the cash surrender value.
Now, that same individual may be able uncover additional value by selling a policy in the Secondary Market. The Secondary Market also provides seniors a liquidity option when stock portfolios are still recovering and insurance premiums are still high or increasing.
In general, policyholders who benefit most in the secondary market are over 65, are not terminally ill, and have a life expectancy out to 15 years. Their policies would have face amounts of between $100,000 and $50,000,000 and must be at least two years beyond the policy issue date.
If you think it would be prudent for your client to consider alternatives like the secondary market, talk to an Ashar 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. It only takes a minute, and it could help save your clients thousands.
Ashar’s proprietary SMV®, Secondary Market Valuation, is a unique analysis performed by Ashar Group to assess the fair market value of a life insurance or annuity asset for planning purposes. How does this help your customers?