LI FE S E T TLE M E NTS
More Seniors Should Be Selling Their Life Insurance Policies Serve Your Clients – Build Your Business BY LISA REH BURGR Please know that I am not here to talk anyone out of their life insurance policy. If your client wants and needs their policy, they should keep it. That said, so many people don’t need their policies any longer, or the policies become too expensive to maintain. FACT: 2.5 million seniors lapse or surrender their policies annually. Only a few thousand sold their policies last year. It should have been a lot more. According to the Life Insurance Settlements Association (LISA), more than $100 billion of face value are lapsed by seniors over age 65 each year. This figure does not even include policy surrenders – this is just lapses. This begs the question – why? 22 | CALIFORNIA BROKER
Clients simply do not know that there is another option. They don’t know they can sell their life insurance policy, and receive cash for it. Starting several years ago, LISA began collecting data on the life insurance settlements market. Their members, representing 95% of the market, submit data regarding the number of transactions, face amount of policies purchased, etc. Here is a synopsis of the data for 2022: ~ 3100 life settlement transactions completed ~ $770 million paid to consumers for the sale of their unwanted life insurance policies ~ $610 million more than the amount CalBrokerMag.com
consumers would have received if their life insurance policies had been lapsed or surrendered ~ 5 times higher than the cash surrender values offered by the life insurance carrier $250,500 more in American’s pockets, on average, for the completion of their life settlement Obviously, there are 2.5 million reasons a year why clients may wish to get rid of their policies, but ultimately, the policies are unwanted, unneeded or unaffordable. Over time, life changes, and the reason a client purchased a life insurance policy may no longer be a concern. Perhaps a spouse has passed away, the kids have moved out of the house, the house is paid off, etc. A term NOVEMBER 2023
