Maximizing Success in 2024 with Policy Appraisals and Life Settlements
The old calendar is running out. The new calendar is full of appointment slots.
As the holiday season approaches and the insurance industry traditionally experiences a slowdown in activity, agents and advisors should use the time to lay the foundation to boost their businesses in the upcoming year.
While scheduling appointments in December may prove challenging, the first quarter of 2024 promises new opportunities.
We will explore several strategies and ways we can help agents and advisors thrive in 2024, with a particular focus on policy appraisals and life insurance settlements for their clients.
Understanding Life Insurance Settlements
A life insurance settlement involves the sale of an unneeded or unwanted life insurance policy on the secondary market for immediate cash.
This transaction yields more than the policy’s cash surrender value, making it a potentially lucrative option for clients.
To capitalize on this opportunity, agents and advisors must first assess their client list.
A policy appraisal is the fastest way to identify this opportunity.
Here are some key considerations:
Universal life policy with big cost of insurance charge increases: Agents and advisors should regularly contact senior clients with universal policies, especially those who have or are about to consider lapsing.
Changing needs or financial circumstances may render these policies impractical, making it crucial to educate clients about the potential benefits of a potential sale before all is lost.
Term policies with remaining conversion options: Convertible term policies, often overlooked for their settlement potential, can be converted to permanent coverage and simultaneously sold on the secondary market.
Most term policies come with a conversion option but may have forgotten about it.
Converting a term policy can open up significant opportunities, especially for senior clients facing policy lapses.
Orphan policies: Orphan policies, also known as unassigned policies, are active life insurance policies without an active agent overseeing them.
These policies often belong to older clients and may have been neglected for years.
Proactively reaching out to orphan policies within your agency can unearth valuable opportunities and we have tools to help you with this simple, yet effective opportunity.
Exploring Client Options
Once you’ve identified clients with life insurance policies that have settlement potential, it’s essential to examine the available options they can consider:
Surrendering the policy: Clients who choose to surrender their policy will stop paying premiums and receive the cash surrender value.
This is the simplest option but often not the most financially advantageous.
Opting for a life settlement: For clients aged 75 or older, a life insurance settlement provides better financial returns than surrendering the policy.
If the client has health issues, a settlement can be an extremely lucrative choice, as it unlocks hidden value.
Using a 1035 exchange: A 1035 exchange, named after a section of the Internal Revenue Code, allows clients to transfer the value of one life insurance policy to another or an annuity or long-term care policy without adverse tax consequences.
Investing the settlement proceeds: If a client opts for a life settlement, it opens up numerous possibilities for agents and advisors.
The proceeds can be used for various purposes, such as acquiring new insurance, funding long-term care or annuities, or even growing an investment portfolio.
Immediate Use of Funds: Clients can also use the settlement proceeds to pay bills, supplement their income, assist family members or fulfill personal dreams, like travel.
Agent and Advisor’s Role as Heroes
In each scenario, agents and advisors play a pivotal role in guiding clients toward the best decision for their unique circumstances.
Life insurance settlements are often seen as found money by clients who were previously unaware of this option.
Agents help clients realize the value of their policies, transforming what might have seemed like a worthless liability into a valuable asset.
The Role of Policy Appraisals
To enable this process, agents and advisors should start with a life insurance policy appraisal.
It provides a clear picture of the policy’s value on the secondary market and is now easier than ever thanks to advanced technology and algorithms.
By obtaining an appraisal, agents can quickly inform clients about the potential financial benefits they could gain.
January
As the year comes to a close, agents and advisors can anticipate the holiday season and the prospect of spending quality time with family.
However, they can also look ahead on behalf of their clients, finding ways to kick-start the new year with mutually beneficial transactions.
By embracing policy appraisals and life insurance settlements, agents and advisors can not only enhance their businesses but also provide invaluable financial opportunities to clients who may not have realized the hidden potential within their life insurance policies.
In 2024, success will be driven by seizing these opportunities and guiding clients toward smart financial decisions and we are here to help you along the way.
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