How Can A Life Settlement Unlock Value From My Unwanted Life Insurance?

Over 80% of life insurance policies do not result in a claim. Find out how a life settlement can help unlock hidden value from unwanted policies.

What is a life settlement? A life settlement is the sale of an existing life insurance policy for an amount greater than the carrier would provide the policy owner should they terminate their coverage.

Why would I sell my life insurance?

·      Premiums are no longer affordable

·      Policy is no longer needed

·      There is a need to create liquidity to cover unforeseen expenses

·      Supplement retirement income

·      A business is sold or key employee has retired

Who qualifies for a life settlement?

·      Senior individuals age 65 and above

·      Has experienced a decline in health since the coverage was originated

·      Policies $100k or greater

What can I expect to receive? Proceeds of a life settlement are highly case specific and are based on a number of factors which include:

·      Annual cost to maintain the policy

·      Client’s age and health

·      Type of policy

Is this legal?

·      In 1911, the US Supreme Court ruled in the Grigsby v. Russell decision that life insurance, much life other private property, can be sold.

·      Life settlements transactions are currently regulated in 42, by the individual state’s insurance department

Please feel free to contact Long Lake Planning to determine how a life settlement can help maximize the value of your life insurance.

3 Ways To Grow Your Money Through Life Insurance

Life insurance has evolved over the years from a vehicle used to solely provide liquidity and income when a loved one or business partner passes, to one capable of offering so much more. What many view as a one-trick pony proves the adage wrong that old dogs can indeed learn new tricks. Today’s life insurance policies have the ability to:

·      Grow savings on a tax-deferred basis: Unlike a traditional savings account, Interest earned through a life insurance policy's investment account is not subject to an annual tax bill.

·      Provide tax free retirement income when properly structured: A policy owner can access their accumulated funds at any time. In contrast to a 401k or IRA, there is no limit on the annual contributions made to a life insurance policy, and policy owners are not required to attain a minimum age before accessing their funds.

·      Fund a child or grandchild’s college education: Unlike a 529 plan, the funds accumulated in a life insurance policy can be used for any life expense as determined by the policy owner.

Is My Employer-Sponsored Life Insurance Enough?

Life insurance is far from a one-size fit all solution, yet many individuals view it as they do the purchase of a new pair of gym socks. A recent conversation with a close friend left me with an uneasy feeling in regards to a belief held by many that their employer-sponsored life insurance is both enough protection, and the most appropriate solution to cover their family in the event of loss.  While a generous addition to an employee’s compensation package, group life insurance policies have significant limitations which need to be better understood by the individual employee and their family to best determine whether or not they need to obtain additional coverage which more accurately reflects their unique goals.  Most group coverage is a temporary form of life insurance. Individuals risk loosing this life insurance and placing their loved ones in jeopardy, should they leave the firm, or have their employment terminated. It is often suggested by advisors, that individuals should obtain life insurance in multiples of their current salary to offset lost income for years to come. While many advisors advocate young families to hold a life insurance multiple of 10X - 20X their current salary in order to properly provide for dependents, the vast majority of employer-sponsored group life policies only cover 1X, 2X, or 3X current salary.  Not only does this represent a huge planning gap which could dramatically impact dependent’s quality of life; major sacrifices will need to be made assuming that lost income is not replaced. The key is to understand your coverage and how it directly impacts the lives of loved ones.

Time For A Policy Review

When was the last time you reviewed the balance and performance of your retirement savings or brokerage account? This is a question I have posed to prospective clients and peers over the past few months. Answers have been quite consistent; with most individuals having done so within the past month or two. As the market fluctuates and goals change over time, it is important to review and rebalance those account holdings to ensure you are planning properly. When I ask the same question to individuals about their life insurance, the result was dramatically different and quite startling. Less than 5% of those I inquired with put any ongoing thought into their life insurance outside of when they are making premium payments. Life insurance is a highly effective planning tool when implemented properly. It can provide protection for loved ones, tax fee liquidity and ensure businesses continue to flourish during transitional periods. With so much at stake, why have less than 5% of individuals reviewed their insurance needs since their current policy was originated? The most common response is that, “I did not know I should review it,” or “my agent never brought up the topic.” While agents should absolutely be proactive in the ongoing management of their client’s insurance policies, clients also need to recognize trigger events for when their current coverage may no longer be adequate in order ensure they have proper coverage when circumstances change.

Below are a few key examples of life events that should prompt a review of your current coverage:

·      Have you recently purchased a new house?

·      Have you welcomed a new child into your family?

·      Are you caring for an aging relative who relies on your financial support?

·      Have you recently gone through a divorce?

·      Have you recently started your own business?

·      Do you have a term life insurance policy approaching the end of its level premium period?

·      Have you recently retired? Do you plan to retire in the near future?