There are many reasons why a life settlement may make sound financial sense for your clients, including (but not limited to):
- Policy’s premium cost has become prohibitive
- Policy’s performance has not met original projections and may require additional premium to support its death benefit
- Primary beneficiary named in a policy predeceases the insured and policy is no longer needed
- Policy owner is now divorced and the beneficiary was his/her spouse
- Corporate buy-sell agreement was established and now one of the partners has died or left the company
- Retirement of a key executive from the firm that insured his or her life
- Level term policies in which the conversion period is expiring
- Term life premium costs have increased beyond affordability
- Insured’s estate has been reduced in size and thus one’s tax burden has been reduced¹
- The government estate tax exclusion allowance has increased thereby lowering the amount of insurance that is needed to pay the client’s estate tax liability
¹ In those instances where an insurance policy was purchased to fund the estate’s tax obligation and now is no longer needed, rather than just letting it lapse or surrendering it for its Net Cash Surrender Value, it may be settled for far more dollars. Bear in mind that tax reform legislation is being proposed.
