Seniors should exercise caution when tempted by direct-to-consumer life settlement ads on TV and social media. Instead, entrust their interests to a resource that ensures they receive the best possible outcome. Don't let every day feel like April Fool's Day—empower seniors to make informed decisions about their financial future.
These fast twitch muscles keep us from falling and breaking something as we age. They allow us to keep our balance if we slip on something or step off a curb without noticing the drop. They allow us to quickly apply the brakes to avoid a catastrophic fall. After the age of 70, if you fall and break your hip, it could be fatal or, at minimum, be a long, painful recovery period that reduces your quality of life.
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.
Considering the financial landscapes many clients are navigating, here's an everyday success story that underscores the importance of valuing assets, particularly life insurance, in crafting comprehensive planning solutions. We recently worked with a client facing the challenge of an underfunded life insurance policy held within an Irrevocable Life Insurance Trust (ILIT). The policy, once thought to be a cornerstone of their estate plan, was underperforming and had become a source of financial strain due to rising premiums.
As retirement has changed over the past several decades, longevity has become a vital component of financial planning. With people living longer, continued inflation, and rising healthcare costs, outliving one’s retirement plan is a real concern. This is why a frank discussion about health, longevity, and long-term care needs to be part of every retirement strategy session with your senior clients.
The more I study the secrets of longevity, the more confused I become. I’ve come to realize that you have to look for common themes and then try something to see if it works for you. I’m age 74 and trying to turn back the clock physiologically and end up living longer and healthier. I’ve always been involved in athletic endeavors, but I realize now that what I have been doing is not enough.
A corporate-owned life insurance policy is generally purchased to protect a business in the event a key partner/employee of that business passes away. Among other benefits, the insurance policy helps to bridge the gaps the death of that individual causes and ensures the company continues to function. But what happens to that policy with the individual retires?
Advisors are asking their compliance departments, “How can I tell my clients that I provide comprehensive and holistic financial planning, yet not disclose the life settlement option when it is appropriate?” With an aging population, many clients prefer to receive a buyout of their existing life insurance for an amount that is higher than their cash surrender value, providing liquidity for investments and other retirement needs.
This is personal. If you’re not paying attention to clients like me, you’re missing out on a huge growing segment of the financial planning arena driven by baby boomers. At my age, I’m on the leading edge of the boomers. In September of last year, I broke my back when took a Superman flight over the handlebars of my mountain bike. I knew immediately this was different than my previous accidents where I was sidelined for several weeks because of torn muscles and ligaments in my shoulders. This time, I couldn’t walk for a while and my thumb and two fingers on my right hand were numb. This one really scared me.
Over time, compliance officers have come to recognize that if life settlements are pursued for the right reasons, after a thorough review of all non-forfeiture options and suitability, a life settlement could very well be in clients' best interests. It is a viable exit strategy that should be disclosed in a comprehensive policy review in partnership with a resource that offers a compliance-centric process. However, broker-dealers do not just allow life settlements carte blanche. They put strict procedural guardrails in place to protect the company and their representatives from liability risk.
