Why and when would a life settlement be right for a client?

As life changes, so do people’s needs. For this reason, a life insurance purchase in the past may not fit your client’s needs today. The reason a policy was once purchased may no longer be valid such as:

• changes in the client’s estate reduce/eliminate the need for insurance
• the client has outlived the intended beneficiary(ies)
• premiums have become too expensive
• the client’s needs have changed and would require a different type of policy (i.e. annuity or long-term care)

Those cases in which a client perceives the continued cost of a life insurance policy outweighs its benefits can be compounded by unforeseen premium increases. Examples of this are when:

• policy performance has not met expectations, requiring increased premiums
• level term policies in which the “level term” ends, causing premium increases or the need for conversion

Businesses often purchase life insurance policies on key people and owners for protection. Examples of cases where this happens and the policies may have “outlived” their usefulness are:

• buy-sell policies for cases in which the owners have retired or the business is sold
• deferred compensation plans when the executive has left the company
• key person policies, after the insured has retired
• policies purchased to cover loans that have since been paid off

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Frankly, anything they want. It is their money to use how they see fit. As their trusted broker or advisor, you should evaluate their needs and suggest the appropriate way to invest the proceeds. Perhaps a long-term care policy or annuity is the right choice for their changing needs.

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No, your client is no longer responsible for paying premiums. Once the policy is sold (and your client is no longer the policy owner), all premium payments and obligations are the duty of the purchaser (the life settlement company).

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