What Advisors (And Everyone) Need To Know About Life Settlements April 24, 2015 (San Francisco) by Carole S. Fiedler Most financial advisors I speak with have heard of Life Settlements, but do not fully understand how they work. They are not sure how their clients can benefit or even how to recognize when a Life Settlement should be considered. Many “captive” insurance agents are prohibited from even mentioning the Life Settlement option, though they are fully aware that a life settlement’s large lump sum liquid payments can greatly benefit both the agent and especially the client. What are Life Settlements? A Life Settlement is the sale of an in-force life insurance policy, for an amount discounted from the face value by an insured 65 years of age or older, and who does not have a terminal illness. Life Settlements create liquidity from a previously illiquid asset – the underlying life insurance policy. By liquidating a life insurance policy at the right time, options are created while other assets that may be less beneficial to liquidate can stay in place. One example would be selling one policy to provide funds for premium payments to maintain another policy. It’s a fact: As people age their need for life insurance changes. Policies are often obtained to protect a spouse, to cover college costs of the children, perhaps make mortgage payments or pay off the...
