Did you know that:
- $200 billion worth of life insurance will be surrendered or lapse each year through 2027.1
- 88% of all universal life insurance policies issued are either surrendered or lapse without the payout of a death benefit by the insurance company.
- 90% of seniors who have let a policy lapse would have considered selling it if they had known that a life settlement was an option.
Fortunately, there is a solution that can help your clients avoid the financial loss caused by all three of these scenarios: a life settlement.
As you introduce life settlements as an option to your clients, they’ll likely have questions. At the top of most people’s lists is this critical question, “Are life settlements a safe option?”
You can answer that question confidently with an unequivocal “Yes.” Here are seven reasons why:
- The United States Supreme Court has established life insurance as personal property that the policyowner can sell.
- Forty-three states and Puerto Rico have regulations in place that provide significant protection for consumers concerning the sale of a life insurance policy. Nine of those states require insurance companies to disclose alternatives to lapsing or surrendering a life insurance policy when a policy is in jeopardy of lapsing, including the life settlement option.
- As a show of support for life settlements, in 2019, the National Conference of Insurance Legislators reaffirmed its commitment to ensuring that life insurance policyholders are informed that life settlements are an option to lapsing a policy.
- The National Association of Insurance Commissioners (NAIC), which is comprised of the top insurance regulators across all 50 states, five territories, and the District of Columbia, has endorsed life settlements as a way aging adults can pay for long-term care costs and other healthcare expenses.
- In all buy 7 states, life settlement providers must be licensed by the Insurance Department of the state where the policyowner resides.
- Your client’s financial and health information must be kept secure by the life settlement company per multiple regulations, including HIPAA regulations. The company must provide a HIPAA authorization form stating how any information collected is used.
- Because life settlements are legal and fully regulated in states where 90% of U.S. residents live, they are recognized as a safe—and tremendously valuable—alternative to letting a policy lapse or surrendering it for considerably less than it might be worth in a life settlement.
If your client no longer needs their life insurance policy or can no longer afford it, getting a policy appraisal is an excellent place to start. Lighthouse Life offers an online calculator to help you estimate how much your client’s policy could be worth in a life settlement.
If you have additional questions, call us at 1-855-230-0800, and we’ll be happy to provide you with the resources you need to present life settlements as a safe lapse or surrender alternative to your clients.
1 Life Settlements – The Growth Continues, Conning, p. 38, October 2021
