In the face of ongoing economic uncertainty and rising inflation, Americans are taking a closer look at their financial plans. While a potential recession and skyrocketing consumer prices are taking a toll on everyone, seniors and aspiring retirees remain the most vulnerable. This is largely due to retiring adults, some of whom chose to leave the workforce early in the midst of the pandemic, living off a fixed income, which now isn’t getting them as far as they hoped.
For clients planning to retire soon or retirees battling to stay afloat in a volatile market, providing an agile retirement planning strategy is critical. Your clients’ life insurance policies might be invaluable assets they can leverage to pay for rising health care costs, assisted living and other expenses associated with retirement. Yet despite decades of innovation and increased transparency, life settlements are continuously overlooked by the financial planning world.
Your client deserves to know the true value of their assets, life insurance included. And with $200 billion in life insurance being lapsed or surrendered each year, life settlements could be the key to giving seniors the retirement they’ve worked their entire lives for.
The life settlement industry has faced multiple roadblocks that have impeded its growth. Lack of awareness has likely been the biggest challenge, with 90% of seniors letting a policy lapse without knowing a life settlement was a potential option.
Failing to educate retirees on the full financial picture means Americans are at risk of lapsing or surrendering their policy for far less than what a life settlement would yield. Financial professionals have also tended to avoid life settlements because they believe they’re underregulated. Despite this misconception, life settlements are completely legal and heavily regulated in most states.
Historically, selling a life insurance policy was also a long, drawn-out process. This is largely due to cost of insurance data being fiercely protected by life insurance companies, which use it to calculate the value of a policy. COI data take into account variables such as when the insured purchased the policy, how old they were when they bought it, their health at the time and the policy type, all of which determine a policy’s worth on the secondary market. Now, advancements in AI technology have turned a several-months-long valuation process into a few minutes’ worth of work.
Policyholders who can no longer afford premiums are often steered in the direction of lapsing or surrendering a policy, but this is simply not the most valuable option. Individuals who surrender their policy will receive a check that includes the cash surrender value of the policy minus the surrender fees. The major drawback with surrendering the policy is that clients receive one “take it or leave it” offer from the insurer, based on variables such as the amount of time the policy has been in force and any interest, dividends or capital gains the policy has accrued.
Just instructing clients about lapsing or surrendering a policy isn't giving them the full picture. A life settlement is often a far more fruitful option and can yield up to 60% of the total policy value. Not to mention that life settlements offer monetization opportunities for financial professionals. Most life settlement companies and brokers will offer referral fees to those who recommended them after the transaction is closed. Additionally, once the sale is finalized, financial professionals can and should provide guidance on how to reinvest that money based on the client’s financial standing and the current market.
As inflation continues to rise, more and more clients will evaluate whether or not they need their life insurance policy, and bringing life settlements to the table is essential.
By tapping into machine learning, the life settlement space has experienced a rapid digital transformation and as a result, become far more efficient and transparent. Now, financial professionals can use a life settlement calculator to evaluate their entire book of clients in a matter of minutes and identify which would qualify and benefit from selling their life insurance policy. By the same token, consumers can now use this tool to understand the value of their life insurance policy and make the best decision for themselves and their families. Similar to Zillow’s formula that revolutionized the way people track property values, this machine learning algorithm is taking the life settlement by storm.
With a financial crisis in full force and seniors nationwide struggling to adequately fund retirement, life settlements are the missing key to redirecting money back into the pockets of retirees.
Lucas Siegel is the CEO of Harbor Life Settlements and Harbor Life Brokerage, which offers a life settlement auction site and an AI-powered life settlement calculator.
By listening for what truly matters and where clients want to make a difference, advisors can avoid politics and help build more personal strategies.
JPMorgan and RBC have also welcomed ex-UBS advisors in Texas, while Steward Partners and SpirePoint make new additions in the Sun Belt.
Counsel representing Lisa Cook argued the president's pattern of publicly blasting the Fed calls the foundation for her firing into question.
The two firms violated the Advisers Act and Reg BI by making misleading statements and failing to disclose conflicts to retail and retirement plan investors, according to the regulator.
Elsewhere, two breakaway teams from Morgan Stanley and Merrill unite to form a $2 billion RIA, while a Texas-based independent merges with a Bay Area advisory practice.
Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.
Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.
