April 23, 2021
After a lifetime of working, many seniors hope for, and have earned, a long and fulfilling retirement.
The risk of outliving one’s assets is called longevity risk, and it is a real and growing concern for many people nearing or already living in retirement.
Fortunately, there are many financial planning strategies that advisors can deploy to help reduce longevity risk and the anxiety it can cause seniors.
One strategy is to regularly review clients’ life insurance policies.
Many clients who own life insurance policies are seeing significant premium increases for policies tied to an interest rate.
Because of continued low interest rates, these policies are requiring new, higher premiums which were not anticipated when the policy was originated.
These increased premiums can reduce the policyowner’s liquidity, and/or deplete the cash value of the policy.
By reviewing clients’ policies on an annual basis, you can help them develop an informed understanding of the cost/benefit tradeoffs of maintaining the policy vs. canceling it, surrendering it, or exploring a life settlement.
Many seniors – and even advisors – are surprised to learn the average life settlement pays out 4x or more than a policy’s cash surrender value. These large life settlement payouts can dramatically reduce longevity risk in a retirement portfolio and provide both peace of mind and long-term stability to clients.
The first step in knowing if a life settlement is something that makes sense for a policyowner is to have the policy or policies appraised. Appraisals are free, fast, and carry no obligation to sell the policy. In some cases, no medical underwriting is required, which can make the life settlement process even easier.
To learn more about life settlements with Lighthouse Life, or to inquire about policy appraisals for clients, contact us.