Growth in Life Settlement Market Attributed to Broader Consumer Awareness
2018 Transactions Totaled $3.8 Billion in Policy Face Value
2018 proved to be a year of substantial growth for the life settlement industry, as reported by The Deal publishing company. The market experienced a 28% increase in the volume of transactions (number of policies sold) which held a policy face value of $3.8 billion. According to The Deal, broader awareness of life settlements along with the demographics of aging baby boomers contributed to the market’s growth.
It’s clear that greater numbers of senior consumers along with their professional advisors are discovering the social utility of life settlements for unwanted policies. As noted in our recent news release, seniors are selling their unwanted life Insurance policies to address a wide range of financial challenges. Many seniors are grateful to know they can derive monetary value from an unwanted policy, versus allowing it to lapse.
What may be even more impressive is the fact that an increased number of professional advisors, (e.g. CPAs, estate attorneys, financial planners and insurance advisors) are seeing life settlement transactions in a new light. According to a recent article written by estate attorneys and published in The CPA Journal, selling one’s life insurance policy should be one of the options on the table to help clients pay for their long term care needs. We believe it’s positive news for consumers that more professional advisors are beginning to view life settlement transactions as a “strategic planning solution.” Some advisors who are bound by a fiduciary duty to their clients actually consider it their professional duty to recommend a life settlement when it is the most financially sound and prudent course of action.
Case Example: CPA, Financial Advisor Opt for Life Settlement
When high net-worth senior clients pose unique challenges that require professional expertise from several members of the estate planning team, arriving at a consensus in terms of the most favorable solution may be challenging. Factors to consider involve liquidity, cash flow during retirement, tax planning and legacy objectives. But in this actual case example, the key members of the client’s advisory team required no arm-twisting and they all viewed a life settlement as “a no brainer” in terms of the best solution for this client.
Professional Advisors Should Seek Multiple Offers
Although more professional advisors are convinced that in certain situations a life settlement is the most favorable (and lucrative) exit strategy for an unwanted policy, some advisors are not clear on which path to take as it relates to selling their clients’ policies. Should they sell a policy directly to a provider (buyer) as they’ve seen on TV? Or, should they partner with a life settlement broker who will initiate an auction process that will generate competing bids from multiple providers.
As experienced life settlement brokers, we obviously believe it is in the seller’s best interests to shop the policy to multiple buyers before accepting an offer. Without going through the auction process of allowing multiple providers to submit competing bids in an effort to determine the highest possible offer, the seller may be left wondering whether their policy could have been worth more.
With forty million Americans currently over the age of 65, the life settlement market will continue to grow. As increased numbers of seniors discover the value of selling their policies in the secondary market, professional advisors should caution them about accepting just one offer for the purchase of their policy. It’s important to work with an experienced broker, such as Asset life Settlements. We’ll negotiate with multiple buyers to ensure each policy owner receives the highest possible offer. In short, we’ll help your client “sell with confidence.”
If you would like to learn more about life settlements or have a potential case you would like to discuss, contact us at 1-855-768-9085.