Shattering a myth about life settlements: 5 advisor benefits

In addition to the benefits to clients, financial advisors themselves can benefit from working with their clients to pursue a life settlement.

As LifeHealthPro has reported, the vast majority of financial advisors are either unfamiliar with life settlements or are familiar with them but have never recommended them to clients. This lack of awareness has led to false perceptions about life settlements among financial planning professionals.

Let’s address one specific myth that has discouraged some wealth management professionals from bothering to learn more about life settlements: “There’s nothing in it for me to recommend that a client explore the sale of a life insurance policy through a life settlement.” If this is something you’ve assumed to be true, you need to know this is plainly false.


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A life settlement is a strategy for seniors who owns a life insurance policy they no longer need or can afford. The senior sells the policy to a third-party investor, who provides cash payment in exchange, then takes over the premiums on the policy and collects the death benefit when the insured passes away. On average, policy sellers receive from four to seven times the amount of the policy's current cash surrender value.

Unfortunately, each year more than $100 billion face value of life insurance lapses by seniors over the age of 65 — mostly from a lack of knowledge that an unneeded or unaffordable policy may be sold. A life settlement is a strategy for helping your client capture some of those benefits, rather than forfeiting them back to the insurance companies.

But in addition to the benefits to clients, financial advisors themselves can also benefit from working with their clients to pursue a life settlement.

The primary benefit is that life settlements present an opportunity for your clients to liquidate an asset in their portfolios and put that new cash to work for either their cash flow needs or for other investments you may wish to recommend. This provides a vehicle for financial advisors to advance client portfolios and better serve their financial needs.

This blog was originally published on LifeHealthPro.
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