Life Settlements

Definition: the sale of a life insurance policy for an amount in excess of the
policy’s cash surrender value.

Life insurance policies should no longer be viewed as a financial tool that can only benefit your loved ones upon death, but also as an asset that can act as a living benefit today.  With the emergence of the “Secondary Market for Life Insurance”, more commonly known as the “Life Settlement Market”, life insurance policies can now represent a current source of liquidity for seniors.  SFS offers seniors and their advisors a trusted and reliable resource when considering a life settlement.

Clients we´ve helped: Client:  79 year old Male Policy Type:  Universal Life Life Insurance Face Value:  $4,000,000 Client Received:  $650,000 Client:  68 year old Male Policy Type:  Term Policy converted Life Insurance Face Value:  $700,000 Client Received:  $121,500 Client:  82 year old Female Policy Type:  Universal Life Life Insurance Face Value:  $2,500,000 Client Received:  $338,000 Client:  78 year old Male Policy Type:  Term Life Insurance Face Value:  $100,000 Client Received:  $13,300 Client:  74 year old Male Policy Type:  Universal Life Life Insurance Face Value:  $750,000 Client Received:  $57,000

SFS President Philip Giordano and George Chamberlin Interview George Chamberlin Click below to listen to the interview

What Is The Life Settlement Market?

The primary market for life insurance consists of the purchase of life insurance from life insurance carriers. The “Secondary Market for Life Insurance” refers to the purchase of existing life insurance policies from policyholders.

The sale of a life insurance policy in this secondary market is referred to as a life settlement and is accomplished through a life settlement contract. A life settlement contract is an agreement between the owner of a life insurance policy and a third party in which the owner sells all rights of ownership, including the right to receive the proceeds from the policy upon the Insured's death. Investors, including many large institutional investors, have begun to purchase these policies from individuals who are willing to sell. The Investor then becomes both the premium payer and beneficiary of the policy.

The life settlement market has grown rapidly in recent years, from practically nothing a decade ago to approximately $50 billion currently and is expected to grow to $160 billion in the next few years according to the investment firm Bernstein Research

The sale value of the policy often times will substantially exceed what the policy owner would receive from the insurance carrier if they just surrendered the policy for cash value. 

Over time, an insured’s needs may change, but their life insurance policy will remain the same.  If it is determined that a policy is no longer needed or cash needs arise, SFS can help seniors actually sell their life insurance policies.  There are several reasons why one might consider selling their life insurance policy for cash, including but not limited to:

Whatever the reason might be, SFS’s goal is to help policy owners receive top dollar for their policies.  This is accomplished through an existing network SFS has developed with several large institutional investors.  Furthermore, SFS’s management has life settlement investment experience, providing insight to investor methodologies and processes.  Altogether, this results in an efficient and profitable customer experience.

Typically, someone who would qualify to sell their life insurance policy would be at least 65 years or older with a policy having a face value of $50,000 to $100,000,000.  SFS can assist in selling all different types of policies including:  Term, Whole Life, Universal Life, and Survivorship policies.  There are exceptions to the rule, so if you have any questions please contact us.

*The following example outlines how a life settlement could financially benefit a senior:

Should the above senior in the example choose a Life Settlement, he would create an additional $150,000 for himself above and beyond the $50,000 he would receive by surrendering his policy to the insurance carrier.   

*The above example is intended to provide you with a general overview of how such a transaction might work and is in no way a guarantee of such results.  However, a similar situation could very well be likely for a qualified senior.

The Life Settlement Market has evolved significantly over the past several years due to an increase in sophisticated institutional funding. Recognizing the potential for success, a number of large institutional investors have committed billions of dollars to purchase Life Settlements, including; Living Benefits Financial Services (a Berkshire Hathaway Company), Goldman Sachs, Deutsche Bank, Barclays Capital, Zurich Financial, and others.  Furthermore, life settlements are now regulated in over half of the U.S. states and pending in most of the remaining states. These institutional funders, in addition to the increased regulation have brought new quality standards, consumer protection, and transactional discipline to the industry. Combined they have generated a sense of confidence that the Life Settlement Market will continue to flourish in the foreseeable future as a valuable consumer benefit for seniors.

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