Do you have a client that is over 65, has $250k+ in current life insurance and is considering surrendering it for CSV or letting the policy lapse?
If your answer is yes, you should look at the Life Settlement Market for a solution…..
Melville Capital, has tapped into a secondary market for life settlements consisting of over 50 major institutions who are interested in buying existing life insurance policies from your clients. This service costs your clients nothing and we serve as a representative of your client in accepting bids from competing institutions. Quite simply, the appeal for your clients who own an unwanted or unneeded life insurance policy is simple. They will receive a one-time, lump-sum cash payment that’s usually much more than the cash surrender value of the policy, and they will be relieved of making all future premium payments on the policy. The National Association of Insurance Commissioners recognizes Life Settlements as a viable solution and the AICPA as well as the American Bar Association recognize an advisor’s fiduciary duty to discuss settlement options with their clients.
Some reasons that this comes up include:
- Applying for Medicaid (or similar programs) and needing to shed
- Through recent estate/tax planning, their estate has been reduced/tax burden has been lessoned.
- The performance of an existing policy has not met the original goals, such as policies that are tied to the stock market.
- The yearly premium payment on the policy has become too expensive to manage. In this circumstance, we don’t have to sell the entire policy because we can do a partial settlement; Shedding the portion of the current coverage that isn’t needed and keeping what still is.
- The beneficiary has died or divorced or just doesn’t need the money.
- A key person has retired/left a company or a buy-sell agreement isn’t needed.
- A convertible term policy is about to expire. Instead of lapsing it, we can shop it & see how much it’s worth PRIOR to conversion, then have the client convert and sell the policy for lump sum.
assets.
The sale of an insured's existing in-force life insurance policy to a third party in exchange for an immediate lump sum cash payment is called a life settlement, an updated version of a viatical settlement. The sale price is less than the face value of the policy, but it may be as high as four times the policy's CSV (cash surrender value).
Life insurance provides financial solutions to meet various business and family needs, yet needs change: loans are repaid, key executives retire, estates become smaller, businesses are sold, and estate taxes are reduced or no longer exist. Sometimes, dropping interest rates make the policy too expensive to keep.
Until a few years ago, the only option for liquidating an in-force yet underperforming or unneeded life insurance policy was to surrender it, let it lapse, or sell it back to the original insurer for its accumulated CSV.
But thanks to an increasingly competitive secondary market, life insurance is no longer treated only as a death benefit. Like stocks, bonds, real estate, and other investment holdings, life insurance has become a fully evolved asset with a FMV (fair market value)-an asset which can be sold by its owner at the highest market price.
Naturally, upon the sale of one's insurance policy to a third party, the owner of the policy is relieved from the financial obligation to make the expensive premium payments due the carrier on an unwanted policy.
What is a Life Settlement? 
