Power to the Policyowner.
Life settlements have changed the way we think about life insurance. For consumers, life settlements and the secondary market for life insurance have unlocked the market value of life insurance, transforming unneeded policies into assets with significant value.
One Transaction. Multiple Applications.
A life settlement is a financial transaction in which a policyowner sells an unneeded life insurance policy for more than the policy’s cash value and less than its face value. But life settlements represent much more than an exit strategy for unneeded life insurance policies. With the assistance of an experienced advisor, a life settlement can be a springboard to achieving a client’s broader financial objectives.
Ideal Candidates.
Life settlement candidates are generally high net worth clients age 60 and over with:
- A life insurance policy with a face amount of at least $250,000.
- Life expectancy of 21 years or less.
Common scenarios leading to a life settlement include:
- The client has outlived the risk insured against.
- A spouse has passed away.
- A business partnership has dissolved.
- A key employee has retired after a long career.
Life Settlement Case Example
Insured: Male, age 79
Policy: Universal Life
Face Amount: $8,000,000
Cash Value: $33,623
Coventry purchased the policies for $600,000
Two policies were originally purchased for estate planning purposes but the client’s estate had decreased in value. As a result, the policyowner was “over-insured” and wanted to dispose of the unneeded coverage. Rather than accepting the policies’ surrender value of $33,623, his advisor recommended a policy valuation from Coventry, which enabled the policyowner to realize $600,000 in a life settlement.
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