#4 - Senior Life Settlement Anatomy 101
Some simple truths about the human condition:
- All actions are preceded by a motivation
- The primary motivations to act are to elicit a good feeling or to solve a problem
- Problems, in simplest terms, are unmet needs
The reasons why someone buys life insurance falls under one or both of the primary motivations. The reasons why someone would want to sell their coverage are the same.
In the beginning, life insurance plays an important role in financial planning. The motivation to buy coverage is to transfer the risk of a financial hardship due to the loss of life to an insurance company. The life insurance industry has flawlessly upheld their promise to pay since its inception.
But life is a dynamic, fluid experience. Circumstances and motivations change over time. Because change is a constant, the life settlement industry was born to create another better choice for some insureds whose circumstances and motivations have shifted.
Since the life insurance industry's inception, an insured who no longer wanted, needed or was able to afford coverage only had two choices:
- Stop paying premiums and lapse their policy at a total loss, or
- Accept a non-negotiable surrender offer from the life insurance company
To be more specific, some of the reasons a policy owner might want to sell their contract are:
- Premiums have become too burdensome
- The need to replace a lost income no longer exists
- A term policy may be reaching the end of its coverage period
- Capital could be alternatively deployed to improve lifestyle
- Estate tax laws have changed
- Business insurance is no longer necessary
As Americans, we enjoy the benefits of freedom and choice. Innovations like the life settlement industry have created a new option for insureds to maximize the benefit of an asset that often disguises itself as a liability.
One of Capstone Alternative Strategies' core missions is to provide information and education to insureds and the financial advisory community. The life settlement option is a socially responsible and beneficial business sector to senior policy owners that want more choice and responsibility over their own financial freedom.
The Life Insurance Settlement Association (LISA) is an outstanding resource to policy owners that are considering a life insurance settlement option.
For more information, please visit www.capaltstrategies.com, call us at (404) 504-7006 or email us at contact@capaltstrategies.com.