Agents can provide their clients with added value through life settlements, which are the sale of a life insurance policy to a third party. The added value is gained when the sale amount is more than a client would get through a cash surrender.
Ideal candidates for life settlements are consumers who are 65 or older and have had a change in health or suffer a medical condition that developed after the policy was issued. The insurance should have a minimum death benefit of $100,000 and be issued by companies rated A or better from Standard and Poor’s.
Once a client opts for a life settlement, they must submit an application and authorize obtainment of medical and insurance information, typically from the past two years. Agents then search for a settlement company that makes the highest offer for the policy. This process usually takes about eight weeks.
There are a number of scenarios in which life settlements are a good option, including when: policies are about to be surrendered or lapsed, the size of an estate reduces, a spouse or beneficiary dies, a business is sold and a client retires or emerges from bankruptcy. They also are a good financial tool for when clients terminate an executive fringe benefit plan or need the extra funds to pay for long-term care.