Transferring wealth & wisdom from generation to generation
Edward E. Wollman, JD, LL.M Wollman, Gehrke & Associates, P.A.
Jamie L. Mendelsohn EVP, Ashar Group
SHOULD I SELL MY LIFE INSURANCE POLICY?
If you are a senior and you no longer want to keep an existing life insurance policy, you have the option to sell it to an institutional third party instead of turning it into your existing life insurance company. This is referred to as Life Settlement. Similar to selling an antique or heirloom, it’s important to understand the long-term value of your life insurance policy before making a quick decision. Start with an appraisal, and based on value, a sale might follow. If you do decide that selling your policy is the right decision, you should ensure you have representation – an advocate for you in the transaction. HOW DOES LIFE SETTLEMENT WORK? If you have a life insurance policy but no longer need it—maybe your children are grown, your business has changed, or your financial situation is dramatically different—you might not want to keep paying for it. Normally, if you cancel the policy, you will only receive the CSV (cash surrender value). However, there’s a little-known option to sell your life insurance policy to investors in what’s called the “life settlement” market for an amount over the cash surrender value. Partner with a Professional A licensed professional who understands life settlements can help you by marketing your policy to investors. They will negotiate offers from different buyers and help you choose the best offer, as well as help you through the contracting paperwork. Case Study: Alternative to Surrender
keep the policy in force. (Especially true if one is on a fixed income) There are many additional reasons why owners choose to cash in or sell their existing policy. Here are a few: • The cost of the policy is rising due to age or contract terms. • Change of circumstances – sale of a business, retirement, spouse pre-deceases the other, divorce, bankruptcy, and etc. • Charitable gift: Accessing the existing cash value or the life settlement payment may satisfy a legacy gift. • Change in tax law: This may result in the need for more life insurance or less, depending on numerous factors to be discussed with one’s financial and estate planner. • Increased longevit • A significant change in health that makes the policy unaffordable. A sale can create immediate cash for planning • Maturity Date of the policy: If the insured lives too long the policy disappears and terminates Before making the decision to sell a life insurance policy, you should consult your CPA, lawyer, life settlement broker, and financial planner. Like other property you own, it is important to understand the value before you materially change it, surrender it or lapse it. If a life settlement works for you, it could generate a significant amount of immediate capital for other planning.
• $1,000,000 universal life policy • 82 female with standard health • CSV = $15,000 • Life Settlement = $250,000
Visit www.probate-florida.com to read more about this subject and other estate planning matters.
Ed Wollman is a Florida Bar Board Certified Attorney specializing in wills, trusts, and estates with over 35 years of experience practicing in the state of Florida.
WHY DO POLICY OWNERS SELL THEIR POLICIES? Policy owner opts for life settlements for several reasons: • Access to immediate cash for current planning needs (including medical expenses, long-term care and other financial needs. It may result in improved quality of life, growth of a business, etc. • The reason it was purchased no longer exists; you wouldn’t purchase the insurance today. • To eliminate the burden of future premium requirements needed to
Edward E. Wollman ewollman@wga-law.com 239-435-1533
Jamie L. Mendelsohn jamie@ashargroup.com 321-441-1119
Where Today’s Plans Become Tomorrow’s Legacy 2235 VENETIAN CT #5, NAPLES, FL 34109 (239) 435.1533 — (239) 435.1433 FAX
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