Have you ever had one of those days where nothing seemed to be going right and suddenly something happened that changed your whole outlook? Here are a couple examples where a life insurance policy contained unexpected value that was uncovered just in time to be a life changer:
John and Mary, age 74 and 69 respectively, had been paying insurance premiums for 19 years on a 20-year term insurance policy on John. They received a notice from the insurance carrier that they would have to change their term policy to a permanent policy and start paying a significantly higher premium or they would lose the coverage. Their kids were all out of the nest and doing well on their own, so the coverage was no longer needed. They asked the insurance agent who sold them the policy if there was any cash surrender value in their Term policy and were told, “Term insurance has no cash value”. They were disappointed and set the renewal notice aside because at that time, they were more focused on downsizing their house and living within their retirement savings. They were running a little short of the money necessary to buy the house they had their hearts set on. As a last resort, they met with a financial advisor to try to figure out if he could provide any insights that could help them make it happen. The advisor informed them that they may be able to sell their Term insurance policy on the secondary market and proceeded to explore this option to help them determine if John’s life insurance policy might contain any hidden value. Right when it looked like they might not be able to purchase their dream retirement home, they discovered that they could sell John’s $500,000 term policy and receive a lump sum payment of $64,000. This created a happy ending to their frustrating home buying experience and today they are living in that dream retirement home thanks to a life settlement.
David, age 54, and his two siblings, Jennifer age 50, and Kyle age 48, had been spending $8,000.00 a month paying for home health care for their aging mother who was age 83. Mom was staying with David and the siblings were constantly squabbling over how long they could keep making these payments for mom’s skilled nursing care at home. This eventually turned into a dysfunctional relationship between the adult children and created significant guilt for everyone. Mom had spent all of her money a long time ago and the kids were quickly burning through their own assets to keep her at home. They were reaching a point where they might just have to let mom go on Medicaid and be placed in a nursing home. They met with a financial advisor and discovered that even though mom had liquidated all of her other assets, she still had a $200,000 life insurance policy in her name. She had not been paying premiums for several years and the policy had only $3,500 in cash surrender value. Their advisor told them that they might be able to sell her policy and get more money. Their advisor contacted a life settlement broker who could represent them in evaluating the policy and help obtain multiple competitive offers. As a result, they sold mom’s policy and received a lump sum of $73,500. The settlement proceeds were placed in an account dedicated to fund caregiving needs and began immediately paying for mom’s home health care expenses. This long-term-care life settlement was a win-win. The siblings received much needed resources to keep mom at home and for the first time in months, mom’s spirits were lifted because she was paying her own way and no longer feeling like a burden to her kids.
If you have a life insurance policy that is no longer needed or has become too expensive to maintain, be sure to check with your financial advisor to see if your policy might qualify for a life settlement.
About the Author
Jon B. Mendelsohn is CEO and Co-‐founder of the Ashar Group, LLC, a nationally licensed life settlement brokerage firm dedicated to representing the seller and their advisory team in appraising and securing fair market value for their life insurance. Jon is recognized in the industry as a thought leader and tireless champion for transparency and life settlement best practices. Jon is a sought after speaker on the national stage and a valued consultant to professionals working with sophisticated clients in the planning process. Jon graduated from the University of Florida with two bachelor degrees and a master’s degree. Jon is a proud supporter of the company cause, The Crohn’ and Colitis Foundation of America. He and his family reside in Orlando, Florida.