Likely, you discuss real estate, trusts, businesses, retirement funds, and other equities with your clients at length. But what about their life insurance policy?
Life insurance policies are assets, but not everyone thinks of it that way. This is why seniors leave such huge amounts of money on the table through lapsed or surrendered life insurance policies. If the 2017 Tax Cuts and Jobs Act doesn't sunset as planned, your clients may no longer need their life insurance policies for planning.
A life settlement is the sale of an existing life insurance policy to an institutional investor for more than the cash surrender value and less than the death benefit. The funds from a life settlement can be used for other planning needs - investments, new insurance on healthier insureds, retirement, charitable donations, and much more.
SUCCESS STORIES
We value thousands of policies each year. View more more life settlement success stories here.
Not every life insurance policy will qualify, but the ones that do can be sold for much more than their cash surrender value.
Try our Life Settlement Probability Calculator to determine if your client's policy could qualify.
Many financial professionals feel they don’t know enough about life insurance or life settlements to discuss this solution with their clients. We're here to help answer your questions about the market and guide you and your client through the process.
Complete the form below and a member of our Strategic Partnerships team will reach out to schedule a time for your life settlement market update with one of our experts.
Ashar Group is a nationally licensed life settlement firm that protects 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, manage assets, or purchase policies. We are an independent resource for fiduciary advisors and their clients specializing in life insurance valuation for planning purposes.
June, an 84-year-old widow, saw something in a television ad that piqued her interest. After husband Frank passed away two years ago from a long battle with heart disease, June found herself in an assisted living facility, burdened by mounting medical bills. While knitting a baby blanket for her new great-granddaughter one afternoon, a captivating commercial flickered across her TV screen, promising relief from her financial worries. It touted the option of selling her life insurance policy for cash through something called a life settlement. Intrigued, she set aside her knitting and jotted down the contact information.
Why did June consider a life settlement? As June pondered the possibility, she realized she no longer had a pressing need for the policy. Her children were grown and financially stable, yet she was still shelling out hefty premiums to maintain coverage. "Why not explore this further?" she thought. With a simple phone call to the number from the commercial, June received a cash offer of $75,000 in less than 48 hours. The offer was three times greater than the $25,000 cash surrender value of her policy.
The offer seemed almost too good to be true, stirring both excitement and unease within June. She felt pressured to make a quick decision and was unfamiliar with the company pushing the deal. Was she being targeted by another financial scam aimed at unsuspecting seniors?
Seeking clarity, June turned to her trusted advisor, Michael, who assured her it wasn't a scam but urged caution. He explained that many direct-to-consumer marketers aim to purchase policies at a steep discount, prioritizing their interests over the sellers'. Instead, Michael suggested consulting a life settlement broker with a fiduciary duty to secure the best deal for June.
Michael contacted Ashar Group, a reputable firm specializing in appraising life insurance assets and facilitating life settlements. With Michael's guidance and Ashar Group's expertise, June embarked on a journey to maximize the value of her policy. Together, they compiled compelling information to present through the policy auction, where multiple buyers would compete for the opportunity to purchase her policy. Just like in a real estate bidding war, this competitive environment drove up the value of June's policy.
Though the process took longer than the initial 48 hours, June felt no pressure to rush, and the outcome was beyond her wildest expectations. The auction yielded 14 separate bids, with the winning offer coming in at a staggering 19 times higher than the cash surrender value. What's more, the winning bid came from the very same buyer who had initially offered her only three times the cash surrender value. The key to this remarkable outcome? The competition created by the auction process, coupled with thorough underwriting, uncovered the true value of June's policy.
The moral of the story is clear: Seniors should exercise caution when tempted by direct-to-consumer life settlement ads on TV and social media. Instead, entrust their interests to a nationally licensed life settlement broker like Ashar Group, ensuring they receive the best possible outcome.
Ashar Group is a nationally licensed life settlement firm that protects 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, manage assets, or purchase policies. We are an independent resource for fiduciary advisors and their clients specializing in life insurance valuation for planning purposes.
Trust & Estates Article - April 2024 | Jon B. Mendelsohn, CEO
Historically, uncertainty in financial markets increases life insurance lapse activity. Think about your parents and the large number of baby boomers who are retiring every day or already retired. What are they worried about?
According to the 2023 Transamerica Center for Retirement Studies Report, the most often cited retirement fears are declining health that requires long-term care (36%), Social Security will be reduced or cease to exist in the future (36%), outliving their savings and investments (35%), possible long-term care costs (30%), not being able to meet the financial needs of their family (30%), and cognitive decline, dementia, Alzheimer’s Disease (29%).
View the full article:
Schedule a 15-minute call to discuss how we help you integrate life settlements into your client conversations.
Halloween is behind us and many of you may have walked through a corn maze with your children or grandchildren at a local pumpkin patch. You may have found that maze easy to navigate, but how do you navigate through the confusing maze of life settlement information to help your client monetize their policy for fair market value (FMV) rather than settling for a discounted value?
The path you choose will determine how much value created ends up on the policy owner/sell-side of the negotiation table versus the buy-side. One wrong turn in the maze can take you and your client down a path that enhances investor returns at the expense of providing more value to your client. We will show you how you can help your clients make an informed decision about choosing the right life settlement company at a time when they are being bombarded with life settlement marketing that can often blur the lines between truth and fiction.
Securing independent representation for your client is the cornerstone of a successful life settlement.
An existing life insurance policy, including convertible term insurance, may contain significant value, beyond the cash surrender value (CSV), that can be accessed and monetized through a life settlement. A life settlement is the sale of an existing life insurance policy for an amount greater than the CSV, but less than the death benefit. How much added value your client receives is totally dependent on which life settlement company they choose to represent them. The good news is that there has been life settlement regulation in place for several years that requires licensing that distinguishes between a seller’s representative and a buyer’s representative. Securing independent representation for your client is the cornerstone of a successful life settlement.
Brokers vs. Providers
There are only two licensed entities that are licensed to handle life settlement negotiations. One represents the seller, the other represents the buyers. Licensed life settlement brokers are fiduciaries to the policy owner. Their sole responsibility is to represent the policy owner in the life settlement transaction and obtain the best offer based on your client’s situation and needs.
One wrong turn in the maze can take you and your client down a path that enhances investor returns at the expense of providing more value to your client.
On the buy-side, life settlement providers are licensed to represent the best interests of the buyers. Most advisors are unfamiliar with the term provider, which is often conflated with the term buyer. As a result, advisors often unknowingly end up on the wrong side of the negotiation table working with a provider. Consumers are even more vulnerable because of constant consumer direct ads from providers on television and social media. If your client responds to an advertisement and gets involved with a “Direct Buyer”, then they are in fact dealing with a provider. Buyers are behind the scenes and prohibited from getting directly involved with the seller. Buyers must be represented by a provider. The only way your client’s best interests are protected is through a broker-managed life insurance policy auction forcing providers to compete.
Your client should only use one broker that forces provider competition because all brokers access the same providers. If providers receive information from two or more brokers, control of the case is lost resulting in a more discounted offer to the seller. Providers can’t trust information that comes from more than one source. Also, sensitive client information is more secure if properly handled by only one broker. When providers are forced to compete that means your client’s case can be looked at by all available institutional buyers.
Two due diligence questions to determine if a life settlement company is on the buy-side or sell-side
Ask your potential life settlement resource these two questions:
Bottom line: There are only two licensed entities that sit at the negotiation table. Life Settlement Brokers represent your client’s best interests, Life Settlement Providers represent the buyer’s best interests. The first step is to verify right up front that the life settlement company you choose to help your client is a seller’s representative. Starting out on the right foot will help you have a big impact on the amount of additional value your client receives.
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Ashar Group is a nationally licensed life settlement brokerage firm and a qualified appraiser of life insurance for estate and tax planning, charitable donations of life insurance, and other aspects of financial and retirement planning. It’s what we do. By remaining deliberately independent and conflict-free, advisors trust Ashar to protect the best interests of the policy owner during a life settlement, thereby mitigating reputational or liability risk for the advisor.
Use our life settlement probability calculator to determine potential opportunities, or contact us today to learn more about the life settlement solution.
Why is Fiduciary Representation Important?
The only way an advisor can ensure their clients get an accurate valuation of their existing life insurance policy (and the best value if a life settlement option is chosen), is by partnering with a life settlement resource that has a fiduciary duty to protect the best interests of the policy owner/seller.
For even the most knowledgeable fiduciaries and financial professionals, it can be difficult to determine who is representing your client. Here’s some information to help complete your due diligence when selecting a life settlement partner.
Brokers vs. Providers
Licensed life settlement brokers are fiduciaries to the policy owner. Their sole responsibility is to represent the policy owner in the life settlement transaction and obtain the best possible offers based on the client’s situation and needs.
Providers are licensed to represent the investors. The secondary market for life insurance would not exist without providers who are licensed to purchase policies on behalf of institutional investors around the world. Institutional investors come and go as funds become available, and the licensed provider’s responsibility is to get these investors the best deal.
Direct-to-consumer buyers have an obligation to the institutional investors who purchase the existing life insurance policies, and their primary goal is to obtain the highest rate of return for the purchase.
Not All Brokers are Created Equal
Only a broker who does not have an interest in companies purchasing policies can be considered an independent resource acting solely in the best interest of the policy owner.
Any individual who holds a life insurance license in their state can pay a fee and apply to be a life settlement broker in that state. An overwhelming majority of life settlement resources acting as brokers are only licensed in one state. Because national licensing is expensive and time-consuming, these entities sometimes “borrow” licenses from other sources to complete transactions in other states. Some life settlement resources are only lead generation companies – meaning they aren’t licensed to facilitate the transaction at all. They simply gather your clients’ information and sell it to licensed sources.
A nationally licensed life settlement fiduciary plays a vital role in protecting your client’s data, ensuring the best offers from reputable institutional buyers, and keeping track of all compliance and regulatory requirements.
Due Diligence: Selecting the Right Life Settlement Resource
Ashar Group is a nationally licensed life settlement broker that acts as a fiduciary to protect the best interests of policy owners in the life settlement process by creating a competitive auction to deliver the best value to the seller. Ashar Group is an independent seller’s representative and does not sell life insurance, management assets, or purchase policies. Find out how we’re different or contact us today.
Ashar Group has created a virtual knowledge base to provide fiduciaries, financial professionals, and strategic partners the ability to stay current on the life settlement market and educate them on the importance of treating life insurance as an asset.
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This post is part of our series for advisors to pass to their clients. Aging doesn’t have to be scary, and we here at Ashar want to help you provide the resources that policy sellers need to flourish in this chapter of their life.
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