Many CPAs and tax advisors are embracing life settlements as a smart choice for life insurance policies that have reached the end of their life cycle in terms of relevance to the client’s estate. (Read our blog titled “Fiduciary Duty: Three Reasons to Include a Life Settlement Needs Analysis in your Advisory Services Menu.”

As a tax planner or estate advisor with a fiduciary duty to your high net worth clients or business owners, you’ll want to explore how life settlements for obsolete policies can often be the most financially sound and prudent course of action.


CPAs and tax advisors recommend selling policies as a smart choice for life insurance policies that have ceased to be relevant to the client’s estate.

Liquidity for Retiring Business Owners

Life Settlements can help business clients convert a capital asset into immediate cash. Life insurance policies are often used to fund a qualified pension or non-qualified retirement plan, such as a 412(i) plan, or a deferred compensation plan. Aging business owners who are seeking to sell their businesses and retire may have an option to turn illiquid assets (such as life insurance policies used to fund retirement plans) into immediate cash.

Leveraging Corporate-Owned Policies

Accountants and CFO's should explore the opportunity to leverage a company’s balance sheet by freeing-up capital trapped in corporate owned policies (and key-person policies) that are no longer needed for business purposes. The proceeds from a life settlement can be used to pay off company loans, free up funds for capital investment, or create a severance package for a departing key person.

New Tool for Bankruptcy Trustees

The role of life settlements in bankruptcy proceedings is becoming more common as professional advisors deploy this method to monetize assets to pay creditors. According to Bloomberg BNA (publisher of legal and tax information for professional advisors), Title 11, Section 363 of the U. S. Code provides the authority for the secondary market sale of life insurance in order to maximize recovery for an estate and its creditors.


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