If you are not yet 65, then give a copy of this article to everyone you know who is. And remember, someday you, too, will turn 65, so put a copy in your desk drawer.
Why all the fuss? Well, here’s the simple—but exciting, unexpected and profitable—story about what you can do to enhance the value of your existing life insurance policies. There are two possibilities.
Possibility #1—You don’t want or don’t need your existing insurance. If the policy has cash surrender value (CSV), you can drop it and pocket the CSV. That’s what most folks do.
If you have term insurance (no CSV), you just stop paying premiums. The policy lapses—you put no money in your pocket.
Hello “Senior Settlement” (SenSet). A SenSet is defined as the sale of a life insurance policy that is no longer wanted, needed or affordable.
A sale? It sounds like you’re going to get money. And you will—as soon as the sale is completed. When the policy has CSV, the sale is always for more than the CSV. The difference is pure profit. Sell a term policy in a SenSet and the full amount of the sale price is pure profit.
How much will your policy be worth? The answer depends on three major factors: Your age, your health and market conditions. On the day this was written, a normal, “healthy” (for the age) 70-year-old could sell a policy for 20 to 24 percent—the older you are, the larger the percentage—of the death benefit (whether a CSV or term policy). In dollars, that’s $200,000 to $240,000 for a $1 million policy. Any of the three factors could change the numbers, but there would always be a worthwhile profit.
Suppose you want to play the SenSet game. There are three requirements.
- The policy must have a net (after-loans) benefit of $250,000.
- The policy must be at least 2 years old.
- The insured must be at least 65 years old.
Possibility #2—You want or need your existing insurance. At first blush, a SenSet would not make sense. But read this brilliant idea (from David Greenspahn, one of the insurance professionals in my network). Suppose your policy (say $1 million) meets all three requirements for a SenSet. In addition, you are still insurable (and, if your spouse is also insurable, it is a big plus). Chances are that you will get way ahead (have a significant in-pocket cash profit and the same amount of life insurance; or have a significantly larger death benefit without one cent of additional cost) by using what we call the “Senior Settlement Strategy” (SenSetStr). Here are the two steps to a SenSetStr.
- Acquire a new policy on your life or second-to-die with your spouse (depending on your particular circumstances).
- After the new policy is in force, sell the old policy in a SenSet.
If you (and/or your spouse) have no health issues, you will wind up a winner—with a nice cash profit, more insurance or both, depending on how you arrange your SenSetStr.
It would take a book to spell out all of the possibilities, choices and specific numbers detailing how enriched you or your family might become after a SenSet or SenSetStr.
If you want more information, I have made arrangements for readers of this column to have their situation analyzed. Then, based on your situation, circumstances and goals, an expert in this area will spell out what you can do and what you must not do. So if you want free help with a SenSet or SenSetStr, send your name, address and phone numbers along with your policy info (your age; death benefit, which must be $250,000 or more; type of policy; company; and CSV, if any) to: Senior Settlement, Blackman Kallick Bartelstein, LLP, 10 South Riverside Plaza, Chicago, Illinois 60606.