CPA Firms...
A Financial Windfall
Awaits Many Senior Clients
Important Notice for CPA firms
with a primary practice in...
 Personal Financial Planning (PFS)
Elder care
Business planning
Tax planning
Estate planning
Retirement planning
A New Fiduciary Responsibility for Advisers
Read this adviser liability article
Let us demonstrate why it's part of a fiduciary responsibility to investigate the life settlement market. We'll show you why a life insurance policy appraisal should be a natural step in the planning process for seniors age 65 and older and why it must be considered as an alternate exit strategy to lapsing or surrendering a life policy.
With millions of American seniors struggling financially as a result of depleted savings, investments and home equity, and even for those seniors who are maintaining a comfortable lifestyle, a life settlement can represent an unexpected and substantial financial windfall for certain senior life insurance police owners.
Life settlements are relatively unknown to life insurance policy owners and also to many certified financial planner professionals. These valuable financial instruments can be highly lucrative for senior clients of CPA firms.
What is a Life Settlement?
A life settlement is the sale of a life insurance policy owned by an individual, a corporation, partnership, foundation, trust, non-profit, or charitable organization, that is no longer needed or wanted. The policy is sold for less than the death benefit amount but for more than the cash surrender value, if any. The buyer becomes the new policy beneficiary and is responsible for paying future premiums. Payout to the new owner occurs at the demise of the seller.
The Market
For more than 10 years the life settlement industry has witnessed steady growth. According to a Life Insurance Settlement Association report, growth is expected to reach $160 billion - a tenfold increase - over the next several years.
The Alliance for Aging Research 2008 report indicates that 6,000 Americans are reaching age 65 every day. These seniors are seeking new financial solutions to fund their retirement years.
Policy Statistics
90% of all life insurance policies either lapse or are surrendered and don't remain in force.
How Does A Client Benefit?
In the past, life insurance policy owners had two options: either surrender the policy for any cash value, or let it lapse. Now, policy owners have a third option - to sell their policy to a third party for a higher payout than any cash surrender value.
Cash benefits gained from a completed life settlement transaction allow for:
Long-term care or other medical care needs
Charitable giving
Gifting to family
Better suited insurance coverage needs
Debt reduction or elimination
Payoff of income or other tax obligations
Investment opportunities
Divorce liquidity needs
Bankruptcy liquidity needs
Business key-man coverage that no longer applies to be discontinued
A business buy/sell agreement that no longer applies to be discontinued
Who Normally Qualifies for a Life Insurance Settlement?
The typical candidate for a life settlement transaction is:
Someone age 70 or older,
With or without health concerns,who is the
Owner of a life insurance policy that's been in force for at least two years, and
With a death benefit or face amount of $500,000 or greater.
Three contributing factors that determine the viability of a life settlement are:
The policy death benefit or face amount
Premium cost
Life expectancy.
Generally, the lower the premiums and life expectancy, the higher the policy's market value.
Life Settlement Success Stories
Case #1
Male, age 74
Policy Type: Universal Life
Face Amount: $1,000,000
Annual Premium: $31,600
Cash Surrender Value: $0
Life Settlement: $415,000
Case #2
Male, age 72
Policy Type: 10-year Term
Face Amount: $500,000
Annual Premium: $3,795
Cash Surrender Value: None
Life Settlement: $145,000
Case #3
Female, age 79
Policy Type: Whole Life
Face Amount: $1,000,000
Annual Premium: $34,664
Cash Surrender Value: $85,260
Life Settlement: $335,000
Case #4
Male, age 69
Policy Type: Term
Face Amount: $500,000
Annual Premium: $13,872
Cash Surrender Value: None
Life Settlement: $280,000
Case #5
Male, age 73/Female, age 70
Policy Type: Survivorship
Face Amount: $3,000,000
Annual Premium: $25,000
Cash Surrender Value: $128,424
Life Settlement: $485,000
Case #6
Female, age 80
Policy Type: Universal Life
Face Amount: $3,000,000
Annual Premium: $96,000
Cash Surrender Value: $403,617
Life Settlement: $1,150,000
Case #7
Male, age 72
Policy Type: Term
Face Amount: $1,400,000
Annual Premium: $24,000
Cash Surrender Value: None
Life Settlement: $385,000
Summary:
Clients of CPA firms rely on trusted financial advice when it comes to making decisions about buying, converting, surrendering or selling one of their most valuable assets - a life insurance policy.
If an unwanted or unneeded life insurance policy is to lapse or is to be surrendered for any cash value, know that selling the policy can return, on average, three to five times the cash surrender value, or more. Even a convertible term policy can be sold for a substantial cash payout.
Our services are provided exclusively on behalf of the policy seller, shopping policies to more than 40 funding sources in order to secure the highest possible cash offer.
Additional Articles for CPA firms:
Accounting Today - The Rise of Life Settlements
Journal of Accountancy - New Value in Old Policies
AARP Bulletin Today - Turning Life Insurance Policies Into Cash
"Life insurance settlements provide living benefits that can be utilized by individuals, corporations, trusts, and non-profit or charitable organizations, alike. Senior policy holders, cpa firms and their clients need to be acutely aware of the tremendous monetary value hidden within many life insurance policies."
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Click here to see if your client qualifies.
CPA firms...let us help you grow your business by strengthening your existing senior client relationships and by attracting new clients through the use of this valuable asset.
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