SlideShare a Scribd company logo
1 of 23
Download to read offline
5 Life Settlement Scenarios
That Make Sense to Seniors
“An informed senior is an engaged client.”
This presentation is an educational resource for professional advisors
brought to you by:
We encourage advisors
to make this informative
presentation part of
your “client tool kit.”
• Host a coffee for senior clients in your office
and share these “5 sensible solutions.”
• Conduct a workshop to educate professional
colleagues on why a life settlement makes
sense for clients with policies that are no
longer needed, wanted, or affordable.
What is Life Settlement?
• A life settlement is the sale of an insurance
policy to an institutional investor for more than
its cash surrender value, but less than its net
death benefit.
• A typical life settlement involves a $1 mil. policy
on a senior in their 70s with a life expectancy of
12 years. (Source: A.M. Best)
• Life settlements offer seniors a viable solution
for unneeded or unwanted life insurance policies,
versus allowing policies to lapse.
A. M. Best, a US-based rating agency for the
insurance industry, summarizes the most
common reasons to sell a policy.
Why Educate Senior Clients
About Life Settlements?
1. Because 80% of policies are allowed to lapse.*
2. Because 82% of seniors are not aware that a
life settlement is a viable alternative to lapse.**
3. Because it’s the right thing to do for your
valued clients who depend on you for counsel.
*Source: Insweb.com
**Source: ICR Market Research, September 2013
SCENARIO #1
Financing Medical or Long-Term Care
Expenses for Policy Owner or Spouse
SCENARIO #1
• Financing medical expenses or long-term care
is the No. 1 reason that most seniors sell their
life insurance policies.
• A 2013 report issued by the U. S. Commission
on Long-Term Care stated that the need for
long-term care will grow dramatically over the
next 20 years as the population ages.
• The U. S. Dept. of Health & Human Services
endorses life settlements as a solution to help
cover long-term care expenses.
(Continued on next page)
SCENARIO #1 (Continued)
• 40%: The percentage of seniors who reach
age 65 who will enter a nursing home during
their lifetimes.*
• 2.44 years: Average length of stay for current
nursing-home residents.*
• $73,000: Median annual rate, nursing-home care
in U.S.*
*Source: Morningstar (Continued on next page)
SCENARIO #1 (Continued)
• The rising cost of nursing home care is
motivating seniors to look at all their financial
options, including surrendering policies.
• According to Insure.com, life settlements
provided an average of 409% more
cash to consumers than what they would have
received by surrendering their policy.
• Informing your senior clients about the option
of a life settlement is the sensible thing to do.
SCENARIO #2
Optimizing the Asset Value of Key-Person Life
Insurance When Selling the Family Business
SCENARIO #2
• The purpose of key person life insurance is to
help ensure the financial stability of a company
when an owner or “key person” dies.
• When a key person retires, the company often
cancels the corporate owned policy (COLI) and
accepts any remaining cash surrender value.
• Life settlements offer an attractive alternative
that enables the company to receive a cash
payment far beyond the cash surrender value.
(Continued on next page)
SCENARIO #2 (Continued)
• Some term life insurance policies
with a conversion option to
permanent coverage may qualify
for a life settlement.
• The increase in the number of
small business owners who plan
to retire over the next 10 years
presents an opportunity for advisors to counsel
business clients now about the advantages of a
life settlement.
70% of the 12 mil.
privately owned
businesses in the
U. S. will change
hands as baby
boomers retire in
the next decade.
SCENARIO #3
Salvaging a Trust-Owned Life Insurance
Policy on the Verge of Lapsing
SCENARIO #3
• Trust-Owned Life Insurance (TOLI) is often
considered the cornerstone of an estate plan.
• TOLI enables the trust to provide a cash
inheritance to survivors, to cover estate taxes,
liquidate debt, or create a legacy through
charitable gifts.
• But because of its long-term investment horizon
to maturity, TOLI is often overlooked by those
monitoring or managing the overall trust.
(Continued on next page)
SCENARIO #3 (Continued)
• Approximately 40% of life settlement
transactions involve TOLI policies.
• The percentage of TOLI policies at risk of
lapsing is expected to increase, due in large
part to the low interest rate environment which
is jeopardizing the expected earnings potential
for universal life policies.
• Insurance advisors have an opportunity to
help clients optimize the value of these at-risk
policies by recommending a life settlement.
SCENARIO #4
Paying Off
Personal Debt or
Helping Grandchildren
with Student Loans
SCENARIO #4
• 70% of 2014 college graduates are leaving
the campus with student loan debt.
• In 2014, college graduates have racked up an
average student loan debt of $33,000.
• $1 .5 TRILLION in student loan debt exceeds
the nation’s $900 billion credit card debt.
(Continued on next page)
SCENARIO #4 (Continued)
• Legacy Trends: Some estate planning attorneys
are incorporating distribution provisions in
Family Trust documents that require the cash
assets in the Trust to be used by heirs to pay
off student loan debt before they can receive
any remaining funds from the Trust.
• Grandparents who do not have an estate plan
or a Trust can create a “lasting legacy” by using
the proceeds from a life settlement to pay off
their grandchildren’s student loan debt.
SCENARIO #5
Retained Death Benefit
Reducing the
Death Benefit of a Policy
to Provide Cash Flow
for Retirement
SCENARIO #5 (Continued)
• A retained death benefit is an ideal solution for
seniors who wish to eliminate premium
payments on an existing life insurance policy,
while retaining a portion of their death benefit.
• The policy owner receives a lump sum cash
payment, keeps a portion of the death benefit,
and is no longer responsible for premium
payments.
SCENARIO #5
• Previous studies have shown that approximately
80% of life insurance policies will lapse.
• A primary reason for letting policies lapse is the
inability to afford premium payments.
• Another reason for the high lapse rate is the
fact that many seniors are not aware they
have other options, including a “Retained
Death Benefit.”
(Continued on next page)
SUMMARY
• This presentation was designed to be an
objective source of information for advisors
about the benefits of life settlements for
seniors who qualify.
• Professional advisors have a duty to inform their
clients by presenting all the facts.
• An informed senior is an engaged client!
THANK YOU!
For more information, or to pre-quality a case, contact us:
1-888-335-4769
Jeff Hallman, Co-Founder Scott Thomas, Co-Founder
JHallman@alsettlements.com SThomas@alsettlements.com

More Related Content

Recently uploaded

OAT_RI_Ep18 WeighingTheRisks_Mar24_GlobalCredit.pptx
OAT_RI_Ep18 WeighingTheRisks_Mar24_GlobalCredit.pptxOAT_RI_Ep18 WeighingTheRisks_Mar24_GlobalCredit.pptx
OAT_RI_Ep18 WeighingTheRisks_Mar24_GlobalCredit.pptxhiddenlevers
 
ekthesi-trapeza-tis-ellados-gia-2023.pdf
ekthesi-trapeza-tis-ellados-gia-2023.pdfekthesi-trapeza-tis-ellados-gia-2023.pdf
ekthesi-trapeza-tis-ellados-gia-2023.pdfSteliosTheodorou4
 
Hello this ppt is about seminar final project
Hello this ppt is about seminar final projectHello this ppt is about seminar final project
Hello this ppt is about seminar final projectninnasirsi
 
Banking: Commercial and Central Banking.pptx
Banking: Commercial and Central Banking.pptxBanking: Commercial and Central Banking.pptx
Banking: Commercial and Central Banking.pptxANTHONYAKINYOSOYE1
 
10 QuickBooks Tips 2024 - Globus Finanza.pdf
10 QuickBooks Tips 2024 - Globus Finanza.pdf10 QuickBooks Tips 2024 - Globus Finanza.pdf
10 QuickBooks Tips 2024 - Globus Finanza.pdfglobusfinanza
 
Zimbabwe's New Gold-Backed Currency- A Path to Stability or Another Monetary.pdf
Zimbabwe's New Gold-Backed Currency- A Path to Stability or Another Monetary.pdfZimbabwe's New Gold-Backed Currency- A Path to Stability or Another Monetary.pdf
Zimbabwe's New Gold-Backed Currency- A Path to Stability or Another Monetary.pdfFREELANCER
 
Uk-NO1 Rohani Amil In Islamabad Amil Baba in Rawalpindi Kala Jadu Amil In Raw...
Uk-NO1 Rohani Amil In Islamabad Amil Baba in Rawalpindi Kala Jadu Amil In Raw...Uk-NO1 Rohani Amil In Islamabad Amil Baba in Rawalpindi Kala Jadu Amil In Raw...
Uk-NO1 Rohani Amil In Islamabad Amil Baba in Rawalpindi Kala Jadu Amil In Raw...Amil baba
 
(Gender) tone at the top: the effect of board diversity on gender inequality
(Gender) tone at the top: the effect of board diversity on gender inequality(Gender) tone at the top: the effect of board diversity on gender inequality
(Gender) tone at the top: the effect of board diversity on gender inequalityGRAPE
 
2024-04-09 - Pension Playpen roundtable - slides.pptx
2024-04-09 - Pension Playpen roundtable - slides.pptx2024-04-09 - Pension Playpen roundtable - slides.pptx
2024-04-09 - Pension Playpen roundtable - slides.pptxHenry Tapper
 
ΤτΕ: Ανάπτυξη 2,3% και πληθωρισμός 2,8% φέτος
ΤτΕ: Ανάπτυξη 2,3% και πληθωρισμός 2,8% φέτοςΤτΕ: Ανάπτυξη 2,3% και πληθωρισμός 2,8% φέτος
ΤτΕ: Ανάπτυξη 2,3% και πληθωρισμός 2,8% φέτοςNewsroom8
 
What is sip and What are its Benefits in 2024
What is sip and What are its Benefits in 2024What is sip and What are its Benefits in 2024
What is sip and What are its Benefits in 2024prajwalgopocket
 
Money Forward Integrated Report “Forward Map” 2024
Money Forward Integrated Report “Forward Map” 2024Money Forward Integrated Report “Forward Map” 2024
Money Forward Integrated Report “Forward Map” 2024Money Forward
 
2B Nation-State.pptx contemporary world nation
2B  Nation-State.pptx contemporary world nation2B  Nation-State.pptx contemporary world nation
2B Nation-State.pptx contemporary world nationko9240888
 
Aon-UK-DC-Pension-Tracker-Q1-2024. slideshare
Aon-UK-DC-Pension-Tracker-Q1-2024. slideshareAon-UK-DC-Pension-Tracker-Q1-2024. slideshare
Aon-UK-DC-Pension-Tracker-Q1-2024. slideshareHenry Tapper
 
Building pressure? Rising rents, and what to expect in the future
Building pressure? Rising rents, and what to expect in the futureBuilding pressure? Rising rents, and what to expect in the future
Building pressure? Rising rents, and what to expect in the futureResolutionFoundation
 
Introduction to Health Economics Dr. R. Kurinji Malar.pptx
Introduction to Health Economics Dr. R. Kurinji Malar.pptxIntroduction to Health Economics Dr. R. Kurinji Malar.pptx
Introduction to Health Economics Dr. R. Kurinji Malar.pptxDrRkurinjiMalarkurin
 
Demographic transition and the rise of wealth inequality
Demographic transition and the rise of wealth inequalityDemographic transition and the rise of wealth inequality
Demographic transition and the rise of wealth inequalityGRAPE
 

Recently uploaded (17)

OAT_RI_Ep18 WeighingTheRisks_Mar24_GlobalCredit.pptx
OAT_RI_Ep18 WeighingTheRisks_Mar24_GlobalCredit.pptxOAT_RI_Ep18 WeighingTheRisks_Mar24_GlobalCredit.pptx
OAT_RI_Ep18 WeighingTheRisks_Mar24_GlobalCredit.pptx
 
ekthesi-trapeza-tis-ellados-gia-2023.pdf
ekthesi-trapeza-tis-ellados-gia-2023.pdfekthesi-trapeza-tis-ellados-gia-2023.pdf
ekthesi-trapeza-tis-ellados-gia-2023.pdf
 
Hello this ppt is about seminar final project
Hello this ppt is about seminar final projectHello this ppt is about seminar final project
Hello this ppt is about seminar final project
 
Banking: Commercial and Central Banking.pptx
Banking: Commercial and Central Banking.pptxBanking: Commercial and Central Banking.pptx
Banking: Commercial and Central Banking.pptx
 
10 QuickBooks Tips 2024 - Globus Finanza.pdf
10 QuickBooks Tips 2024 - Globus Finanza.pdf10 QuickBooks Tips 2024 - Globus Finanza.pdf
10 QuickBooks Tips 2024 - Globus Finanza.pdf
 
Zimbabwe's New Gold-Backed Currency- A Path to Stability or Another Monetary.pdf
Zimbabwe's New Gold-Backed Currency- A Path to Stability or Another Monetary.pdfZimbabwe's New Gold-Backed Currency- A Path to Stability or Another Monetary.pdf
Zimbabwe's New Gold-Backed Currency- A Path to Stability or Another Monetary.pdf
 
Uk-NO1 Rohani Amil In Islamabad Amil Baba in Rawalpindi Kala Jadu Amil In Raw...
Uk-NO1 Rohani Amil In Islamabad Amil Baba in Rawalpindi Kala Jadu Amil In Raw...Uk-NO1 Rohani Amil In Islamabad Amil Baba in Rawalpindi Kala Jadu Amil In Raw...
Uk-NO1 Rohani Amil In Islamabad Amil Baba in Rawalpindi Kala Jadu Amil In Raw...
 
(Gender) tone at the top: the effect of board diversity on gender inequality
(Gender) tone at the top: the effect of board diversity on gender inequality(Gender) tone at the top: the effect of board diversity on gender inequality
(Gender) tone at the top: the effect of board diversity on gender inequality
 
2024-04-09 - Pension Playpen roundtable - slides.pptx
2024-04-09 - Pension Playpen roundtable - slides.pptx2024-04-09 - Pension Playpen roundtable - slides.pptx
2024-04-09 - Pension Playpen roundtable - slides.pptx
 
ΤτΕ: Ανάπτυξη 2,3% και πληθωρισμός 2,8% φέτος
ΤτΕ: Ανάπτυξη 2,3% και πληθωρισμός 2,8% φέτοςΤτΕ: Ανάπτυξη 2,3% και πληθωρισμός 2,8% φέτος
ΤτΕ: Ανάπτυξη 2,3% και πληθωρισμός 2,8% φέτος
 
What is sip and What are its Benefits in 2024
What is sip and What are its Benefits in 2024What is sip and What are its Benefits in 2024
What is sip and What are its Benefits in 2024
 
Money Forward Integrated Report “Forward Map” 2024
Money Forward Integrated Report “Forward Map” 2024Money Forward Integrated Report “Forward Map” 2024
Money Forward Integrated Report “Forward Map” 2024
 
2B Nation-State.pptx contemporary world nation
2B  Nation-State.pptx contemporary world nation2B  Nation-State.pptx contemporary world nation
2B Nation-State.pptx contemporary world nation
 
Aon-UK-DC-Pension-Tracker-Q1-2024. slideshare
Aon-UK-DC-Pension-Tracker-Q1-2024. slideshareAon-UK-DC-Pension-Tracker-Q1-2024. slideshare
Aon-UK-DC-Pension-Tracker-Q1-2024. slideshare
 
Building pressure? Rising rents, and what to expect in the future
Building pressure? Rising rents, and what to expect in the futureBuilding pressure? Rising rents, and what to expect in the future
Building pressure? Rising rents, and what to expect in the future
 
Introduction to Health Economics Dr. R. Kurinji Malar.pptx
Introduction to Health Economics Dr. R. Kurinji Malar.pptxIntroduction to Health Economics Dr. R. Kurinji Malar.pptx
Introduction to Health Economics Dr. R. Kurinji Malar.pptx
 
Demographic transition and the rise of wealth inequality
Demographic transition and the rise of wealth inequalityDemographic transition and the rise of wealth inequality
Demographic transition and the rise of wealth inequality
 

Life Settlements Are An Effective Estate Planning Tool

  • 1. 5 Life Settlement Scenarios That Make Sense to Seniors “An informed senior is an engaged client.” This presentation is an educational resource for professional advisors brought to you by:
  • 2. We encourage advisors to make this informative presentation part of your “client tool kit.” • Host a coffee for senior clients in your office and share these “5 sensible solutions.” • Conduct a workshop to educate professional colleagues on why a life settlement makes sense for clients with policies that are no longer needed, wanted, or affordable.
  • 3. What is Life Settlement? • A life settlement is the sale of an insurance policy to an institutional investor for more than its cash surrender value, but less than its net death benefit. • A typical life settlement involves a $1 mil. policy on a senior in their 70s with a life expectancy of 12 years. (Source: A.M. Best) • Life settlements offer seniors a viable solution for unneeded or unwanted life insurance policies, versus allowing policies to lapse.
  • 4. A. M. Best, a US-based rating agency for the insurance industry, summarizes the most common reasons to sell a policy.
  • 5. Why Educate Senior Clients About Life Settlements? 1. Because 80% of policies are allowed to lapse.* 2. Because 82% of seniors are not aware that a life settlement is a viable alternative to lapse.** 3. Because it’s the right thing to do for your valued clients who depend on you for counsel. *Source: Insweb.com **Source: ICR Market Research, September 2013
  • 6. SCENARIO #1 Financing Medical or Long-Term Care Expenses for Policy Owner or Spouse
  • 7. SCENARIO #1 • Financing medical expenses or long-term care is the No. 1 reason that most seniors sell their life insurance policies. • A 2013 report issued by the U. S. Commission on Long-Term Care stated that the need for long-term care will grow dramatically over the next 20 years as the population ages. • The U. S. Dept. of Health & Human Services endorses life settlements as a solution to help cover long-term care expenses. (Continued on next page)
  • 8. SCENARIO #1 (Continued) • 40%: The percentage of seniors who reach age 65 who will enter a nursing home during their lifetimes.* • 2.44 years: Average length of stay for current nursing-home residents.* • $73,000: Median annual rate, nursing-home care in U.S.* *Source: Morningstar (Continued on next page)
  • 9. SCENARIO #1 (Continued) • The rising cost of nursing home care is motivating seniors to look at all their financial options, including surrendering policies. • According to Insure.com, life settlements provided an average of 409% more cash to consumers than what they would have received by surrendering their policy. • Informing your senior clients about the option of a life settlement is the sensible thing to do.
  • 10. SCENARIO #2 Optimizing the Asset Value of Key-Person Life Insurance When Selling the Family Business
  • 11. SCENARIO #2 • The purpose of key person life insurance is to help ensure the financial stability of a company when an owner or “key person” dies. • When a key person retires, the company often cancels the corporate owned policy (COLI) and accepts any remaining cash surrender value. • Life settlements offer an attractive alternative that enables the company to receive a cash payment far beyond the cash surrender value. (Continued on next page)
  • 12. SCENARIO #2 (Continued) • Some term life insurance policies with a conversion option to permanent coverage may qualify for a life settlement. • The increase in the number of small business owners who plan to retire over the next 10 years presents an opportunity for advisors to counsel business clients now about the advantages of a life settlement. 70% of the 12 mil. privately owned businesses in the U. S. will change hands as baby boomers retire in the next decade.
  • 13. SCENARIO #3 Salvaging a Trust-Owned Life Insurance Policy on the Verge of Lapsing
  • 14. SCENARIO #3 • Trust-Owned Life Insurance (TOLI) is often considered the cornerstone of an estate plan. • TOLI enables the trust to provide a cash inheritance to survivors, to cover estate taxes, liquidate debt, or create a legacy through charitable gifts. • But because of its long-term investment horizon to maturity, TOLI is often overlooked by those monitoring or managing the overall trust. (Continued on next page)
  • 15. SCENARIO #3 (Continued) • Approximately 40% of life settlement transactions involve TOLI policies. • The percentage of TOLI policies at risk of lapsing is expected to increase, due in large part to the low interest rate environment which is jeopardizing the expected earnings potential for universal life policies. • Insurance advisors have an opportunity to help clients optimize the value of these at-risk policies by recommending a life settlement.
  • 16. SCENARIO #4 Paying Off Personal Debt or Helping Grandchildren with Student Loans
  • 17. SCENARIO #4 • 70% of 2014 college graduates are leaving the campus with student loan debt. • In 2014, college graduates have racked up an average student loan debt of $33,000. • $1 .5 TRILLION in student loan debt exceeds the nation’s $900 billion credit card debt. (Continued on next page)
  • 18. SCENARIO #4 (Continued) • Legacy Trends: Some estate planning attorneys are incorporating distribution provisions in Family Trust documents that require the cash assets in the Trust to be used by heirs to pay off student loan debt before they can receive any remaining funds from the Trust. • Grandparents who do not have an estate plan or a Trust can create a “lasting legacy” by using the proceeds from a life settlement to pay off their grandchildren’s student loan debt.
  • 19. SCENARIO #5 Retained Death Benefit Reducing the Death Benefit of a Policy to Provide Cash Flow for Retirement
  • 20. SCENARIO #5 (Continued) • A retained death benefit is an ideal solution for seniors who wish to eliminate premium payments on an existing life insurance policy, while retaining a portion of their death benefit. • The policy owner receives a lump sum cash payment, keeps a portion of the death benefit, and is no longer responsible for premium payments.
  • 21. SCENARIO #5 • Previous studies have shown that approximately 80% of life insurance policies will lapse. • A primary reason for letting policies lapse is the inability to afford premium payments. • Another reason for the high lapse rate is the fact that many seniors are not aware they have other options, including a “Retained Death Benefit.” (Continued on next page)
  • 22. SUMMARY • This presentation was designed to be an objective source of information for advisors about the benefits of life settlements for seniors who qualify. • Professional advisors have a duty to inform their clients by presenting all the facts. • An informed senior is an engaged client!
  • 23. THANK YOU! For more information, or to pre-quality a case, contact us: 1-888-335-4769 Jeff Hallman, Co-Founder Scott Thomas, Co-Founder JHallman@alsettlements.com SThomas@alsettlements.com