"What are we seeing out there?"....Significant opportunity
Offers are up! - New funds have launched, buying boxes have expanded and buyers are aggressively chasing policies. There's more competition, and sellers are benefitting.
Policyowners want to know- 90% of seniors surveyed said they would have liked the option to sell prior to lapsing their policy (1). With high costs of healthcare, LTC and retirement coming into play, and even rising premiums, policy owners need new solutions.
Life insurance carriers have begun to announce increases to cost of insurance rates on certain blocks of UL products, with a focus on insureds over age 70 with policies over $1 million. An increase in COI charges will have an immediate economic impact on non-guaranteed policies, forcing policyowners to make difficult economic decisions.
Yet, many policyowners and ILIT trustees are completely unaware of the changes in COIs and the resulting impact.
A private survey conducted by Harris Poll in May 2014 of policyowners revealed:
- 29 percent said they haven't reviewed their policy since purchased;
- 60 percent think the policy terms are "set in stone";
- 60 percent believe their policy benefits are guaranteed forever; and
- 47 percent say their insurance agent had never encouraged them to review the performance of their policy.
Policyowners considering reducing their face amount or surrendering their policies may find better value with Retained Death Benefit and cash settlement options.
Each year more than $112 billion of life insurance is lapsed or surrendered by seniors over the age of 65 (2).
These policy owners have already made the decision that they are not going to maintain their coverage. It not about should they keep it. The question is, what's the best non-forfeiture option: a life settlement or the policy's surrender value?
While low interest rates and rising COIs have eaten away at some account values, policy owners that qualify for a life settlement can receive on average 8 times more than a policy's surrender value (3).
Consider a free policy appraisal for your clients to determine if a Life Settlement is right for them.