Informed Eldercare Decisions, Inc. Expands Services to Find Solutions to the Rising Costs of Long Term Care:
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New Value NOW in Old Policies...

Clients can recover a significant source of cash to pay for the costs of long term care or other needs by selling unneeded life insurance policies-even if the policy has no cash value.
  
Life settlements are a creative option to give policy owners a more desirable alternative to surrendering or terminating a life insurance policy. Currently, there is approximately $492 billion of life insurance in force for people over 65 years of age. Nearly one quarter, or $108 billion, is available for life settlements.
  
What it is life settlement? In its basic form, a life settlement is the transfer of a life insurance policy from the policyholder to a third party that promises to make all future payments in order to keep the policy active. In return for turning over the policy (and its proceeds), the policyholder receives a cash payment today.
  
The sale of this policy (at a discount from the face value) transforms what is often seen as a future asset into a current asset. With current economic conditions created by poor retirement fund performances, this potential asset has taken on much greater significance for many people. In fact, it can be argued that NAPFA members have a fiduciary responsibility to inform your clients of the potential advantages of this financial products, even though you may be viewing it as a non-performing, off-balance-sheet asset.
  
Many older Americans have life insurance policies they view as unnecessary because they no longer meet the original need that was intended when they bought the policy. They mistakenly believe that they can only generate a substantial payback for all those premiums they’ve paid if they die-or turn the policy in for it’s modest cash value.
  
As estate tax rules change and the policies clients purchased to pay these taxes become unnecessary, this trend is likely to increase. Before you decide to abandon old policies, we can help you recover the potentially significant wealth that may be trapped there. Allowing unneeded policies to lapse can be a costly mistake. Both individual and corporate clients and even employers can sell the right to collect on these otherwise dormant assets and get a substantial cash payment now.

How to Determine if Selling Some or All of Your Life Insurance Makes Sense for You

Determining if selling a policy is a good idea is a relatively easy process and potentially lucrative for policyholders.

Actuarial data suggest 40% of all policies on people age 65 and older will not be held to maturity.
  
The National Association of Insurance Commissioners estimates that in 1996 nearly $1.5 trillion face amount of life insurance policies expired, lapsed or was cancelled by policyholders; each policy was a potential source of wealth had the owner sold it on the secondary market.

Consumers have long viewed life insurance merely as a means of providing liquidity to pay estate taxes, to protect surviving family members, to fund buy/sell agreements or to meet other business needs. Based on this narrow view it’s no wonder so many policyholders fall into the trap of agreeing to allow unneeded policies to lapse or be surrendered for just their cash values.
  
This is especially true if the coverage is no longer necessary and the premiums have become burdensome. However, this may be bad advice since such policies often have a secondary market value far exceeding their cash value.

Case study.

A 76-year-old man owned a policy with an $8 million face amount and a $795,000 cash surrender value. He sold the policy for $2.3 million rather than let it lapse, cancel it or take the cash value. Had he not sold it, he would have left at least $1.5 million on the table.

DOES YOUR LIFE INSURANCE QUALIFY FOR SALE ON THE SECONDARY MARKET?

Many types of insurance policies qualify for settlement, including term, whole, variable or universal life, any type of survivorship, adjustable life, joint first to die, group (if convertible) and retired lives reserve. The aftermarket for life insurance operates in two areas—viatical and lifetime settlements—each with different tax implications.
  
Viatical settlements involve the sale of a policy insuring the life of someone who is either terminally or chronically ill. Proceeds are free of federal income tax and state income tax in some states (such as New York and California) since they are considered a death benefit.
  
Life settlements are for people with or without health problems but with a life expectancy of 15 years or less. According to current mortality tables, this means males age 70 or older and females age 74 or older. (Those with serious health problems are likely to receive a larger cash settlement).

Policyholders should consider selling an unneeded life insurance policy when they can use the proceeds to:

• Liquefy an otherwise dormant asset. (Sometimes the insured has simply outlived his or her family or beneficiaries.
• Fund new, more cost-effective life insurance coverage.
• Create funds to make other investments.
• Fund an outright charitable gift or charitable trust.
• Make cash gifts to other family members.
• Corporations should consider selling unnecessary life insurance policies on employees’ lives if:
• The company has been sold to a third party and the policies’ original purpose was to fund a buy/sell agreement on one partner’s death.
• The insured key person retires or is no longer involved in the business.
• The policy is part of litigation among partners.
• The company must sell assets to raise cash.
• The policy was purchased to fund deferred compensation or other benefit programs that have now changed.

Businesses may also benefit from selling a policy in the secondary market to purchase an interest in another enterprise.

• Facilitate the transfer of a business to the next generation.
• Repay debt.
• Buy back stock from a partner or shareholder.

BUYER’S CRITERIA
  
While there is no size limit on policies a consumer can sell in the secondary market, the usual face value is at least $250,000. Many buyers, however, routinely purchase policies worth significantly more. Companies will even buy a partial interest in a policy. The lower the cost to carry the policy and the faster the expected payment, the more attractive an offer a policy is likely to attract.
  
Companies that buy life insurance policies in the aftermarket use these criteria to determine the price to offer:

• Policy face value. Depending on the buyer, the minimum face value is seldom below $250,000 for some buyers.
• Insured’s age. The older the insured, the higher the offer.
• Health impairments. The more severe the health condition, the higher the likely offer.
• Existing policy structure.
• Existing policy value.
• Existing policy premium. The potential buyer uses this to determine the cost of maintaining the policy until it pays off.

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TRY THIS SIMPLE SELF-ASSESSMENT OF YOUR ACTIVE LIFE INSURANCE TO DETERMINE IF YOU MAY QUALIFY FOR A GENEROUS CASH OFFER FOR YOUR POLICY

To determine if your life insurance policy qualifies for a cash offer from a reputable investment company use the scoring sheet below.

Qualifying Worksheet

Part One – The Policyholder

1 point Male aged 74 or less or female aged 77 or less 2 points Male aged 75 to 78 or female aged 78 to 81 3 points Male aged 79 to 83 or female aged 82 to 86 4 points Male older than 84 or female older than 87 1 point In good health 2 points Minor health problems 3 points Significant health problems    4 points    Has a terminal or catastrophic illness    Part One - here is your Total Score

Part Two – The Policy

1 point Joint Survivorship 2 points Term or whole life 3 points First to die 4 points Universal life or joint survivorship with one deceased 1 point Cash value exceeds 30% of death benefit 2 points Cash value 20 - 29% of death benefit 3 points Cash value 10 - 19% of death benefit 4 points Cash value less than 10% of death benefit 1 point Loan value exceeds 30% of death benefit 2 points Loan value 20 - 29% of death benefit 3 points Loan value 10 - 19% of death benefit 4 points Loan value less than 10% of death 1 point Premiums exceed 4% of death benefit annually 2 points Premiums are between 3% and 4% of death benefit annually 3 points Premiums are between 2% and 3% of death benefit annually    4 points    Premiums are less than 2% of the death benefit annually    Part Two - here is your Total Score

Less than 8 points in Part Two would need a score of 7 or 8 in Part One to qualify.
  
10 points or higher means you have a good possibility to get a cash offer now – please call 1-800-375-0595 to discuss or send an eMail to info@elderlifeplanning.com for a prompt response.

  

Life settlements are going mainstream.

Many people buy life insurance in the beginning stages of their estate planning that is appropriate for their circumstances at that time, but as years go by their original need for their policy changes. Policyholders of a certain age, should consider the potential for life settlements to help them maximize the value of these no longer needed policies.
  
There are other benefits to learning more about life settlements. Clients who qualify for life settlements can see what the highest purchase offer is. If they choose to accept the payment, they have added pure bottom-line dollars to their asset base. Those who don’t qualify will find out the total liquidation value of that asset, and therefore be able to properly re-calculate their net worth and know their true financial picture.

  

A successful financial outcome is never by accident. It is the result of high intention, sincere effort, intelligent direction, and skillful execution.
  
Once again, to find out if you are eligible for a life settlement on your existing life insurance, call 1-800-375-0595 with any questions, or send an eMail to info@elderlifeplanning.com for a prompt response.
  
  
  

Informed Eldercare Decisions, Inc., 450 Washington Street, Suite 108 Dedham, MA 02026    1-800-375-0595    www.elderlifeplanning.com info@elderlifeplanning.com

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