Coventry: Help Your Clients Tap Into the Open Life Insurance Secondary Market


Life Settlement
Policy	Term
Insured	Male, age 75
Face Amount	$11,000,000
Cash Value	$0
Coventry First purchased the policy for $2,750,000.
Click for More Case Details As part of his retirement package, a retiring CEO received an $11 million term policy. Since he had no desire to maintain the ongoing premiums, his advisor suggested having the policy valued by Coventry First to determine its market value. The client opted for a Coventry First life settlement which enabled him to reach his goal of establishing a $2,750,000 million trust for his grandchildren.


Life Settlement
Policy	Universal Life
Insured	Female, age 87
Face Amount	$6,500,000
Cash Value	$705,000
Coventry First purchased the policy for $2,500,000.
Click for More Case Details The client was still paying premiums in the tenth year of her seven-year vanishing premium policy. She was unhappy with the policy’s performance, but needed life insurance for estate planning purposes. Her attorney recommended having the policy appraised by Coventry First to determine its market value. The client chose a Coventry First life settlement which yielded more than three times the cash value of the policy. She used the proceeds to obtain more efficient coverage and meet her estate planning goals.


Life Settlement
Policy	Multiple Whole Life & Universal Life
Insured	Female, age 83
Face Amount	$12,000,000
Cash Value	$2,400,000
Coventry First purchased the policy for $4,300,000.
Click for More Case Details The client’s current policies were underperforming. Her advisor, understanding her need for insurance for estate purposes, suggested a Coventry First life settlement. The market value of her policies provided her with $1.9 million more than the cash value in her old policies. Using the proceeds from the life settlement, she was able to obtain a new $15 million guaranteed death benefit policy. Although the cost per thousand for the new insurance was higher, the premium outlay was 30% less after the income from the life settlement.


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Do your clients know the fair market value of their life insurance policies?
In a recent case, a 77 year-old man had a $3.9 million policy that was not performing up to expectations. His advisor recommended that the policy be appraised. Coventry First determined that the market value of his policy was $740,000, four times its cash surrender value. The client decided to sell the policy and use the proceeds to fund new, more cost-efficient insurance. The new policy had a face value of $4.4 million and significantly lower ongoing premiums. Such life settlement cases are an everyday occurrence now that the secondary market for life insurance has transformed the financial planning landscape for high net worth individuals.

A Free Market for Life Insurance
Life insurance provides financial solutions to meet various needs of businesses and families. Over time, however, needs change. For example:

loans are repaid
key executives retire
estates become smaller
businesses are sold
estate taxes are reduced — or better yet, no longer exist
the policy becomes too expensive

Until several years ago, these individuals were facing a monopsony, a market situation in which a seller can only sell to one buyer. Imagine if a homeowner, after living in the home for many years, was told that instead of being permitted to sell the home to any willing buyer, he or she could only sell it back to the original builder at the price determined by the builder. Clearly, no one would tolerate such a situation for homeowners, but it has existed for life insurance policyowners. For many years, policyowners have had only one buyer for their policies — the life insurers. The advent of a secondary market has lessened the monopsony power of life insurers and created a free market for policyowners to value their insurance.

Before the advent of the secondary market, life insurance policies could not readily be sold, and it would have made little sense to speak of a policy’s fair market value. By its very existence, this new and growing secondary market for life insurance bestows on every policy a fair market value like the owner’s other financial assets.

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