Maximizing Success in 2024 with Policy Appraisals and Life Settlements

What You Need to Know

For many clients, the cost of owning a life insurance policy is rising.
Many of the agents who sold the policies have left the industry.
The clients may have no idea that they can sell the policies.

As the holiday season approaches and the insurance industry traditionally experiences a slowdown in activity, agents and advisors should use the time to lay the foundation to boost their businesses in the upcoming year.

While scheduling appointments in December may prove challenging, the first quarter of 2024 promises new opportunities.

We will explore several strategies and ways we can help agents and advisors thrive in 2024, with a particular focus on policy appraisals and life insurance settlements for their clients.

Understanding Life Insurance Settlements

A life insurance settlement involves the sale of an unneeded or unwanted life insurance policy on the secondary market for immediate cash.

This transaction yields more than the policy’s cash surrender value, making it a potentially lucrative option for clients.

To capitalize on this opportunity, agents and advisors must first assess their client list.

A policy appraisal is the fastest way to identify this opportunity.

Here are some key considerations:

Universal life policy with big cost of insurance charge increases: Agents and advisors should regularly contact senior clients with universal policies, especially those who have or are about to consider lapsing.

Changing needs or financial circumstances may render these policies impractical, making it crucial to educate clients about the potential benefits of a potential sale before all is lost.

Term policies with remaining conversion options: Convertible term policies, often overlooked for their settlement potential, can be converted to permanent coverage and simultaneously sold on the secondary market.

Most term policies come with a conversion option but may have forgotten about it.

Converting a term policy can open up significant opportunities, especially for senior clients facing policy lapses.

Orphan policies: Orphan policies, also known as unassigned policies, are active life insurance policies without an active agent overseeing them.

These policies often belong to older clients and may have been neglected for years.

Proactively reaching out to orphan policies within your agency can unearth valuable opportunities and we have tools to help you with this simple, yet effective opportunity.

Exploring Client Options

Once you’ve identified clients with life insurance policies that have settlement potential, it’s essential to examine the available options they can consider:

Surrendering the policy: Clients who choose to surrender their policy will stop paying premiums and receive the cash surrender value.

This is the simplest option but often not the most financially advantageous.

Opting for a life settlement: For clients aged 75 or older, a life insurance settlement provides better financial returns than surrendering the policy.