Senior Life Insurance Settlements: Education is key By Jim Wolf, AIM Life Settlements As an Senior Life Settlement professional, I am constantly amazed at the positive financial benefits our industry provides to the senior life insurance policy owners. One only needs to sit in on a few calls from our senior citizen clientele to get a sense of what is happening in senior households across the country. Circumstances such as continuing to pay on a life insurance policy that has become too expensive, OR realizing that the original need for a life insurance policy no longer exists, OR cash is needed to pay for other expenses, OR preferring to reinvest in a different financial product such as a long term care policy, an annuity or updated life insurance.  For AIM Life Settlement clients (be they direct or working through a financial advisor) a Life Insurance Settlement is a financial godsend.  For financial professionals Life Settlements present an incredible opportunity to assist their senior clients, while deriving meaningful financial incentive.  To become successful in Life Settlements education is the key. What follows is a brief overview of the industry and process.  Life Settlements are growing at an incredible rate. In just the last few years, the business of Life Settlements has grown into what is now a multi-billion dollar industry with thousands of U.S. seniors realizing the benefits of a improved quality of life, freedom from bills, relief from financial stress and assured life-long income.  What makes Life Settlements possible is the existence of a “secondary  market” for Life Insurance policies, which has been created by institutionally backed funders who actively buy Senior Life policies. Given the presence of Life Settlements, one would be ill-advised to cancel or lapse a policy, before investigating if it can be sold to a funder for a large cash sum.  Another interesting shift brought on by Life Settlements is that Life Insurance is now viewed as a “living asset” for the policy owner. As such, Life Insurance should be evaluated in the same manner as other living assets such as real estate, stocks, CD’s, etc. This means that, just as you do with all of one’s assets, obtaining an appraisal of the settlement value of your Life Insurance policy is essential to making accurate financial decisions. Determining this value will tell you if you should: 1) retain the Life policy, 2) cash out of the Life policy or, 3) seek other financial and/or insurance options.  WHY CONSIDER A LIFE SETTLEMENT? The reasons that seniors chose the option for a Life Settlement are highly varied, and in many circumstances very personal. But, one thing is common through all their decisions...the original reasons for obtaining the life policy have diminished. Here are some of the most common reasons that influence many Senior’s decisions to obtain a Life Settlement:  * Policy premiums are too high.                                   * The original need for the policy no longer exists. * The beneficiary of the policy is financially stable or deceased. * The policyholder desires an improved standard of living or additional income. * The policyholder owns multiple policies. * The policyholder needs to obtain a new policy that is more closely suited to his or her life needs. * The funds are used to purchase an Annuity. * Funds are needed to pay for medical expenses, long term care, etc. * A reduced estate value eliminates the need for a life insurance policy, which was originally purchased for tax liability reasons. * Senior policyholder wishes to make a cash donation to charity.   While there are no restrictions on how the proceeds from a Life Settlement are spent, it is interesting to note that over 50% of seniors use these funds to purchase a replacement or different financial instrument.  THIS EXAMPLE WILL TAKE YOU THROUGH STEPS IN THE PROCESS... Let’s say that Sammy Senior owns a $1,000,000 life insurance policy with a Cash Surrender Value (CSV) of $125,000. The CSV is the amount the insurance carrier will pay Sammy should he decide to surrender or lapse his life policy. Important note: A life policy does not have to have a CSV to be eligible for a Life Settlement. Almost any type of life policy will work.  Sammy Senior has wanted to cancel his life insurance policy for years. It is too expensive and his original need for obtaining the policy has changed over time. He learns about the benefits of a life settlement and after a brief phone conversation with a Life Settlement Consultant (or his advisor), he realizes that his policy is actually worth a tremendous amount of money.  In his case, his Life Settlement Consultant anticipates that he might receive a life settlement in the range of 35% to 50% of his policy’s $1,000,000 face value. This translates into a settlement amount of $350,000 to $500,000!  As you would expect, this amount impresses Sammy and he readily decides to go to the next step...the application.  His application process is a snap. All Sammy needs to do is complete a few simple forms which provides the authorization to confidentially review his insurance policy and medical records.  He is delighted that he does not have to invest any time or money in the process, and the best news ... there are no medical exams. Just a few simple forms to complete, and he is done.  After receiving paperwork, his Life Settlement team goes to work rating his case and presenting it to a long list of institutional funders. In affect they will create an “open market’ or “auction” for his policy, which to Sammy’s satisfaction is completed in the utmost confidentiality and security. His particular Life Settlement team goes so far as to present his case to every Institutional Funder in the industry, to insure that Sammy’s policy obtains the absolute highest Life Settlement amount.  After negotiating the highest bid, the Consultant contacts Sammy to present the offer. In this case, the settlement came in at $485,000 - the high end of the projected range. Sammy is ecstatic and accepts the offer. The Funder draws up the paperwork, and once the agreement is signed, Sammy’s life insurance policy is placed in an escrow account and Sammy receives his lump sum cash payment. He is free to do anything with the money that he wishes. He can: buy a long term care policy, purchase an annuity, fund a new life insurance policy or take a trip around the world!  Important note: Sammy is always in full control. At anytime he can accept or deny the Life Settlement. He can even cancel the transaction up to 15 days after he has received funds.  WHAT TYPES OF POLICIES ARE CONSIDERED FOR A LIFE SETTLEMENT? Almost every type of life insurance policy is considered for a Life Settlement. Among them are:  * Term * Universal Life * Whole Life * Survivorship * Key-man  Policies can be owned by individuals or entities, such as trusts, corporations and charitable organizations. However, the policy must be at least 2 years old.  WHO ARE LIFE SETTLEMENT CANDIDATES? Here are some general candidate guidelines:  * Males over age 65. * Females over age 70. * Individuals with a life expectancy of 12 years or less. * Anyone suffering from a terminal illness. * Minimum of $100,000 in life insurance coverage. * Financial rating of the insurance carrier. * Other circumstances may qualify.  WHAT IS THE VALUE OF A LIFE INSURANCE POLICY?   The value of a life insurance policy is determined by a number of factors, including, but not limited to, the age and medical condition of the insured, type of insurance policy, rating of the issuing insurance company and amount of premium payments to keep the life insurance policy in force. Actual settlement amounts will vary from individual to individual. At the end of this report we provide the information to help you get information specific to you.  THE APPLICATION PROCESS The AIM Life Settlement process is a snap and a very simple process:  * There are no out of pocket costs paid by the seller of the policy. The purchaser of the policy (i.e Funder) pays all of the transaction fees. * You start the process by phoning our office (1-888-441-8881) to conduct a brief consultation, which is designed to help you determine if a Life Settlement is right for your client. Should you decide to go to the next step, a simple and confidential application would be completed. * The application allows medical and insurance records to be confidentially reviewed by our team. No medical examinations are needed. * The team then conducts negotiations with every institutional funding source to insure the highest cash amount to the policyholder. * Upon acceptance of a settlement amount, a purchase and sales contract is completed. * A third-party escrow account is established. * Policy ownership and beneficiary rights are transferred. Funds are released from escrow to policy owner. * Standard processing time (application to fund transfer) takes between 6 and 10 weeks.  CAN THE POLICY OWNER CHANGE THEIR MIND? Yes...absolutely…and at any time during the process. In addition, there is a 15-day rescission period after receiving the settlement funds to have the Life policy transferred back to the policy owner.  HOW DOES ONE GET STARTED? We recommend obtaining a free “Life Settlement Analysis.”  A “Life Settlement Analysis” will 1) provide details on the information described in this report, 2) identify if you are a candidate and 3) determine an approximate settlement value for your Life Insurance policy.   To schedule your free phone appointment or to get answers to any of your questions, please call our office at 1-888-441-8881   Jim Wolf Life Settlement Specialist AIM Life Settlements www.aimsettlements.com jim@aimsettlements.com 1-888-441-8881