Posted Oct 25, 2017
Turning Age 100 is a Beautiful Milestone – Or Is It?
By Daryl Hable, Director of Operations at Settlement Masters
The Wall Street Journal published an article in July 2017 about a gentleman celebrating his 100th birthday – certainly a beautiful milestone, but one that was overshadowed by the sad realization that his life insurance policies had reached their own milestones.
You see, his life insurance policies were designed to “mature” at his 100th birthday and under their terms, the policies would pay out only their current cash surrender values. When compared to the death benefits, the cash surrender values represented pennies on the dollar.
Most permanent insurance policies that were issued prior to 2002 that combine death benefits and tax-deferred savings components have provisions that terminate the death benefit and call for the payout of the cash surrender value when insureds reach the specified age of 100. Some products have set that age set at 95.
With people living healthier lifestyles and with improvements in health care, the number of individuals celebrating their 100th birthdays increased 44% between 2000 and 2014.
What does this mean for other elderly Americans who own life insurance policies – assets that they believe will one day pay the death benefit to their heirs? It means that financial advisors, estate planners, wealth advisors, and accountants need to become more aware of this potential problem and recommend that their clients order Market Value Appraisals of their policies.
As part of our Market Value Appraisal, Settlement Masters outlines various options that are available to our clients to maximize the values of their policies. Included in our appraisals is the option of a Life Settlement, which is the sale of a life insurance policy that is no longer needed or wanted to an institutional buyer. In addition to receiving a cash payout, the policy owner is no longer burdened with premium payments or the risk that the insured outlives the death benefit.
To find out more about life settlements, please call us at (877) 927-7243.