Learn How to Get a Retirement Stream From Your Book of Business
The right life insurance policy can be greatly beneficial for its holder, but more and more seniors are realizing that in some cases life settlements can be even more advantageous. The professionals who are best equipped to recognize these distinctions, and to direct their clients to the right option, are life insurance agents.
Specifically, seasoned life insurance agents with two or three decades behind them in the industry have amassed a significant book of business that can be used to benefit both the agent and the policy holders. With a bit of education about the circumstances that might warrant a life settlement, agents can create a source of valuable retirement income for their clients while also earning a commission to help their own retirement.
As an experienced insurance agent, you often have both a personal relationship with your clients and the information at your fingertips to determine their suitability for a life settlement. Agents might be concerned that, having sold the policy to a client years ago, they are now advocating the sale of that same policy. But at the heart of the life settlement option is the understanding that financial and insurance needs change over time, and an agent who understands those shifts and the available options can be invaluable to a senior seeking advice he or she can trust.
A useful conversational on-ramp to this topic, for insurance agents and financial advisors alike, is to ask the question, “Have your insurance needs changed?” The keys to talking to clients about life settlements are knowledge of the industry and knowledge of your clients.
Before initiating a conversation about the possibility of a life settlement, use your book of business to determine which clients might be a good fit.
Since the predicted payout schedule of a life insurance policy is based on the statistical data and trends used to estimate the health of the policy holder, there is obviously room for error. When the actual health condition of the insured is worse than the original policy underwriting predicted, that person’s life settlement value can be significantly higher than the value of surrendering the policy for cash. Additionally, the extra funds made available by the settlement can help with necessary health care costs for a client in that situation.
Policy Cost Structure
The favorability of a life settlement can also be affected by the valuation of a policy when it was initially issued. If a policy is issued with a preferred-plus or a preferred rating, the holder will be eligible for a life settlement with fewer insured impairments than someone whose policy was issued as rated. When a policy originates with a lower valuation, a life settlement is less likely to be favorable.
As an insurance agent with many years invested in your clients, you can be a valuable asset to them as they consider the financial options available to help them fund their retirement years. By carefully evaluating your book of business and educating yourself on the specifics of the life settlement market, you can stand as a trusted voice for those who might benefit from a re-evaluation of their life insurance and its utility for their current needs.