What is a life settlement? A life settlement is the cash your client, the policyholder, receives from selling his or her life insurance policy when it is no longer appropriate for them. The United States Supreme Court, in its Grigsby vs. Russell decision, declared that "a life insurance policy is personal property and is freely transferable..." That means every policyholder has the right to sell their life insurance policy; the question is whether or not it will qualify for purchase.

Who can qualify? In order to qualify for a life settlement, the following criteria must be met:

• Client aged 70 or older

• A change in insurability since issue

• $100k minimum policy face amount

• Life expectancy of 15 years or less

Why would your client consider a life settlement?

• Most Insurance is taken out to cover the untimely death of a family's breadwinner, at retirement those needs change

• Change in business situation

• Estate liquidity

• Estate values decreased

• Bankruptcy

• Divorce

The reason why a policy was purchased can change over time. When that happens, a life settlement may be an ideal option. More than 20% of insured age 65 and over hold policies that are worth more than their cash surrender value. Few clients realize that a life insurance policy can be sold for a fair market value that may far exceed its surrender value from the insurance carrier that issued it.

How will you benefit from a life settlement?

• Commission up to five percent of the face value of the policy

• If you are the writing agent of the sold policy you continue to receive renewals, as the life insurance policy will remain in force

• Proceeds can be used to purchase additional products that fit your client's needs. Another policy, LTC, Annuities, etc.

Part of your planning process for clients over age 65 should be determining if their policy qualifies for a life settlement and what the fair market value of their life insurance policy is. This can easily be done through a life settlement evaluation. Getting Started If you haven’t participated in a life settlement before now, you’re probably a little uncertain about taking your client through a relatively new procedure. That’s why we are here. With hundreds of cases under our belts, we know the ropes and will help guide you and your client through this transaction.