Putting Money in Motion

How life-settlements create new and viable liquidity solutions

by Stephen Terrell

Life settlements have evolved significantly in recent years, from a liquidity tactic for the terminally ill to put money in motion — and you in front of clients. Let that sink-in for a minute. It’s precisely what we all want more of: clients with money to invest. The kind of sales opportunities that shouldn’t be missed, and that many of us spend a great deal of time and money chasing.

Don’t dismiss life settlements as commission-only transactions… they are more like golden sales opportunities. Still, even many of the most successful and savvy advisors are missing out on them. We are all better served when we learn all the facts.

Although the life settlement industry has fundamentally changed in recent years, for many agents and financial advisors what hasn’t changed is their understanding of the remarkable opportunities that these transactions represent. Quite simply, there is a lot of business being left on the table.

Today, life settlements are significant and lucrative liquidity events that are fast, easy and accessible transactions that – commissions or not – can be seen differently through a lens with a slightly longer view. They deserve a fresh look, focusing on the long-term benefits for clients, financial advisors, estate planners, agents and brokers.

The benefits are clear; there is simply too much at stake to ignore them.

Settlement Companies Aren’t Competitors

The good news for advisors is that these guys aren’t the enemy, they are not competitors and in no way are they targeting your clients’ money. Today most all of the settlement companies are institutionally funded; their sources include pension funds, endowments, insurance companies and some of the largest financial institutions, as well as family offices, hedge funds, and other assorted accredited investors. They aren’t in business to compete for your client’s investment funds. Their aim is much simpler: convincing advisors and agents to take a different look at what might be an insurance policy that is outdated or no longer needed.

More is at Stake than a Commission

Here is the longer view. Life settlements are transactions that can put hundreds of thousands, even millions of dollars, into motion. Unlike the liquidity events everyone dreams of, such as selling a business, real estate or reconfiguring investment portfolios, life settlements are immediate and efficient transactions that are remarkably straightforward.

Superior Service is Good Business

It’s always good business to get in front of clients, and an annual meeting is an ideal way to offer an evaluation of their life insurance policy. This is a mutually beneficial way for you to present options and meet fiduciary obligations… an increasingly important aspect in light of recent liability cases. One California case in particular, involving Lincoln National Life Insurance Co, alleges liability for failing to make policyholders aware of their options. The annual meeting prevents this, and also builds client loyalty, and reinforces trust with service. As a bonus to advisors and agents, it can also pre-qualify clients before they commit to a life settlement, revealing the value buried in life insurance policies they may not have thought about for years.

Getting Started

The life insurance policy needs to first be evaluated to see if a life settlement makes sense. The complete process generally takes a few weeks. Input is required from the policy seller, but an evaluation comes quickly in the form of a summary and non-binding illustration. Previously unavailable for agents and advisors, this is a powerful tool that many settlement companies can generate in a matter of days.
More and more advisors are recognizing that life settlements present a viable option to clients, one that serves them better, diminishes risk and satisfies your obligations. Good business that benefits everyone.