BY LISA REHBURG
Did you know that 500,000 seniors a year will walk away from their life insurance policies? Some of these seniors could be your clients — Medicare clients, business owners, life insurance clients and more. But why does this happen? The short answer is that clients no longer want the policy, need the policy or can afford the policy any longer. The reason a policy was purchased 10, 20 or even 30 years ago is no longer a concern. The house is paid off, perhaps a spouse has passed away, a business has been sold, the premiums have gotten expensive, etc.
A life insurance settlement is the ability for a client to
sell their life insurance policy for cash. The investor groups who purchase these policies become the new owner, pay the premiums, and become the beneficiary. The client receives cash today, and the buyer receives an investment with a future return. All different types of policies can be sold, including term policies.
As an insurance agent, you do not need to be a life insurance expert, or even the writing agent on the life insurance policy to help your client. This can also be a good way to attract new clients, as many people have no idea they can sell their policy. If you meet with your clients for an annual review, asking them about their life insurance policy can be a good place to start. Or, adding an article in your monthly newsletter or an educational email to your clients can also help raise awareness of the benefits of life insurance settlements.
The amount a policy could be worth is very specific to each client, but policies can be worth tens of thousands or hundreds of thousands of dollars — all from an asset a client was going to walk away from. Here are some real-life stories of clients, and their agents, whose lives were enhanced through a life insurance settlement:
- A 66-year-old woman with multiple sclerosis had a $150,000 term life insurance policy. Her beneficiary was her ex-husband. There were no children, and there was no one she wanted to leave the money to. Since she didn’t need it anymore, she decided selling the policy made sense, in order to give her money for the care needs she knew she would need in the future. The policy was marketed and she sold it for $25,000, giving her the financial cushion, she wanted. The referring insurance agent made $3,500 in commission.
- A 78-year-old man with cancer had a $250,000 term policy. He purchased the policy for his wife, so she would be protected and could pay off the house, if something should happen to him. The house had long been paid off, and his wife passed away 4 years ago. His daughters were the beneficiaries. They had successful careers and their families did not need the money. He decided that he wanted to sell the policy to make his life more comfortable while he was still here. The opening offer on his policy was $15,000. By using a good life settlements broker who marketed the policy, he eventually sold it for $128,500. That will go a long way to helping him stay comfortable for the rest of his life. The client was thrilled, and the referring life insurance agent earned $14,000 in commission.
- A 58-year-old man with significant heart issues had a $1.6 million universal life policy. He was a successful businessman, and his family was well cared for. He had a dream of living on a ranch for the rest of his life. So, he sold his business, sold his house, and sold his policy for $350,000 (the opening offer was $125,000). Now, he has the resources to live the rest of his life the way he wants. The insurance agent received $25,000 in commission.
- A 66-year-old man with liver issues had a term life insurance policy that was reaching the end of its term. He purchased it for his wife to pay off the house, if something happened to him. The house is paid off, and he was not going to continue the policy. He sold the policy for $75,000. This was great for him, as he was going to walk away from the policy with nothing, and helped make his life more comfortable. His insurance agent for his Medicare policies referred him, and collected $12,500 in commission.These are just some examples of clients who were able to repurpose an asset they didn’t know they had, into cash to use however they wanted. The clients are thrilled, receiving “found money” from an asset they did not know they had. And, the referring insurance agents helped their clients, but also helped their businesses as well, receiving an additional revenue source. Besides commission from the life insurance settlement itself, your client may need additional products or services from you, once they receive their money. Perhaps an annuity or additional insurance products are needed.As an insurance agent, you do not need to be a life insurance expert, or even the writing agent on the life insurance policy to help your client. This can also be a good way to attract new clients, as many people have no idea they can sell their policy. If you meet with your clients for an annual review, asking them about their life insurance policy can be a good place to start. Or, adding an article in your monthly newsletter or an educational email to your clients can also help raise awareness of the benefits of life insurance settlements.
On average, a life insurance settlement generates 3 to
5 times cash surrender value. So, if your client is thinking about lapsing, surrendering, or walking away from their policy, considering a life insurance settlement can be an important option for them — and for you too.
LISA REHBURG is president of Rehburg Life Settlements, a life insurance settlements broker. Rehburg is energized by helping brokers and their clients benefit from unwanted or unneeded life insurance policies. By having access to many investor groups, Rehburg Life Insurance Settlements can place more policies and realize a better return for clients. Rehburg has been working with brokers in the health and life insurance industries for over 30 years. She can be reached at (714) 349-7981, lrehburg@aol.com or www.rehburglifesettlements.com