The world of life insurance has changed. A secondary market has come of age in which investment pools are willing to purchase policies from others who are old or sick, and either don’t want the policies or can’t afford to pay the premiums anymore. Usually the policies are salable if the insured has an estimated life expectancy of 12 years or less. The seller won’t receive the full death benefit but will often get paid an amount significantly over the cash value. If it is a convertible term policy, then any amount would be sizable.
So why am I mentioning life settlements at this stage? As part of our charitable strategies, I would encourage people who are older and contemplating dropping their policies to consider donating them to charity. For charities who own policies and are finding they need to pay premiums for more years than expected due to low dividends or interest rates, they might consider a life settlement as a way of getting cash today from these policies. Either way, if there are old policies out there that don’t seem to be valuable to you, it is worth a discussion before letting them lapse or cashing them in.
We would be happy to do an appraisal of policies being considered for termination or donation.