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Case Examples

A 79 year-old male owned a universal life policy with a face amount of $1.5 million. Originally purchased for estate preservation, the policyowner could no longer afford premium payments on the policy. Rather than allowing the policy to lapse, his advisor suggested a policy valuation. Coventry First provided the policyowner with $196,000 for a policy that otherwise had no cash surrender value, which he used for immediate retirement expenses and supplementary income.

The 73 year-old policyowner and his spouse originally purchased a $3 million survivorship universal life policy 14 years prior for estate preservation. A couple of years after his wife passed away, he approached his advisor because he no longer needed the coverage and could not afford premium payments. Rather than allowing the policy to lapse – since it had no cash value – his advisor suggested a policy valuation. Coventry First provided the policyowner with $270,000, which he used for supplementary retirement income.

Thirteen years earlier, a businessman purchased three policies with a total face value of $12 million for estate planning purposes. With total annual premium payments projected at over $206,000, he arranged for his business to fund the premiums for two of the policies as part of a split dollar agreement. Now, facing a downturn in his business, along with current total annual premiums of more than $290,000, the policyowner decided he no longer wanted to keep the policies in force. He needed to repay his business just over $1 million for accumulated annual premium payments, while the policies' cash surrender value was $962,400. He contacted his advisor who suggested a policy valuation. Coventry First paid the policyowner $1,271,000 for the three policies, which was more than enough to repay the accumulated annual premiums owed.

Ideal candidates for a life settlement.

Ideal candidates for life settlements are high-net-worth clients age 65 or older with:

A life insurance policy with a face amount of at least $500,000.
A change in insurability since the policy was issued.
A life expectancy up to 20 years.

A life settlement can be a good option for a variety of reasons which include:

Policyowner may have outlived the risk insured against.
Spouse has passed away.
Business partnership has dissolved.
Key employee has retired.

In other cases, investment projections may have proven unduly optimistic in the current low-interest environment. So-called “vanishing” premiums have not vanished, and the financial plan built around the policy is not being met. In any such case, the owner may want out of their policy, either to buy a more efficient life insurance policy or to move the value into another asset.