TITLE

Assessing Clients' Life Settlement Offers

AUTHOR(S)
Katt, Peter C.
PUB. DATE
July 2002
SOURCE
Journal of Financial Planning;Jul2002, Vol. 15 Issue 7, p36
SOURCE TYPE
Academic Journal
DOC. TYPE
Article
ABSTRACT
This article examines the value of life settlements to clients. Life settlement firms and proponents always refer to the sale of life insurance policies that are no longer needed. Often, life insurance policies move from the needed to the wanted category as children have become independent or a family business is sold. Life settlement firms readily point out that life settlements almost always involve the affluent who can continue paying life insurance premiums. For those few who sell their policies because of their inability to continue paying premiums, selling their policy may be a rational choice. Because life expectancy refers to approximately half dying before and half after the specified time, in the aggregate, life settlement firms should achieve the investment return they plan for. But each individual insured will have different financial results depending on which side of the average they fall, which is why it is important to evaluate the financial prospects so each potential policy seller can assess the potential advantages and disadvantages according to their own view. Have an independent financial analysis done before a policy is sold. The life settlement firm is not in the business to determine what is in the best interests of prospective sellers. It is naturally pursuing its own financial interests.
ACCESSION #
6990045

 

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