Life Insurance Lapses Expected to Increase in 2024
Historical statistics tell us that life insurance lapse rates increase during economic downtimes. With increased inflation and ever-rising premium costs, we would expect that trend to continue well into 2024.
Did you know – 88% of life insurance policies never pay a death claim?
More than 9M policies lapse each year, and only about 3,000 life settlement transactions occur. How many more of those lapsed policies could have qualified for a life settlement – a buyout of existing life insurance for an amount greater than the cash surrender value and less than the death benefit?
If only 1% of those lapsed could have qualified, that’s 90,000 policies resulting in billions to consumers over the cash surrender value.
From paying for long-term care and retirement planning to increased AUM, your clients can benefit from exchanging unwanted/unneeded/affordable life insurance policies for cash – recouping past premiums paid and eliminating future premium burdens.
As a trusted advisor, you're undoubtedly aware of the financial strain that can arise when life insurance policies no longer align with your client's needs. The cost of waiting can be significant, both in terms of diminishing cash values and escalating premium obligations.
These resources are designed to empower you as a trusted advisor to provide timely and strategic solutions for clients facing dwindling cash values and increased premium burdens.
Early Detection: Encourage clients to assess their life insurance policies early before they consider lapse/surrender, especially if they are experiencing cash value reductions or struggling with rising premiums. Timely evaluations enable you to identify potential life settlement opportunities before the situation worsens.
TOOL #1: Request the Planning Checklist for Existing Life Insurance – this will help you ask the right questions about your client’s existing life insurance policies.
Education and Awareness: Educate clients about the option of life settlements and make them aware of the potential financial benefits. Many policyholders are not fully informed about the possibilities available to them, and your guidance can be instrumental in helping them make informed decisions.
TOOL #2 : Request an in-person or virtual for your team(s) from one of our executive team members.
Collaboration with a Fiduciary to the Policy Owner: Partner with an independent life settlement seller’s representative who employs a policy auction that creates competition and increases the offers to policy owners. Engaging with experienced professionals can help expedite evaluations, negotiations, and the overall settlement process.
TOOL #3: NAEPC Journal Article – Maximizing Life Settlement Value Through a Policy Auction
Strategic/Comprehensive Planning: Incorporate life settlement considerations into your client's overall financial planning strategies. By proactively addressing the changing dynamics of their life insurance policies, you contribute to more resilient and adaptive financial plans.
TOOL #4: Life Settlement Probability Calculator – determine the likelihood that the policy has value in order to start the conversation.
Regular Policy Reviews: Conduct regular reviews of your client's life insurance policies to stay ahead of any shifts in their financial landscape. This proactive approach allows you to identify life settlement opportunities as soon as they arise.
TOOL #5: Contact us to help you navigate this process.
Ashar Group is a nationally licensed life settlement firm representing 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, management assets, or purchase policies. We are an independent resource for fiduciary advisors and their clients specializing in life insurance valuation for planning purposes.