Life settlement policy, another live example.
So I get a call the other day from a CPA friend of mine. He has a 48 yr old client with a $1.8M term policy that is expiring. The client is a breast cancer survivor from 10 years ago and unfortunately she has been diagnosed with a small brain tumor. As of yet we don’t know what her long term prognosis is. Luckily the term policy has a conversion feature. A conversion feature allows an insured to convert their term policy over to a permanent whole life type policy without evidence of insurability. However, she is not in a financial position to pay the big premiums on the converted policy. I suggested we look at a life settlement policy on a portion of the newly converted permanent policy. The life settlement policy I suggested was to do an appraisal on $800,000 of the new policy in hopes of getting maybe a couple hundred thousand dollars. These new dollars could then be used to pay the premium on the remaining $1,000,000 of the term converted policy.
Depending on her prognosis and the actuarial life expectancy results, we may be entering a viatical settlement area. A viatical settlement is a market for those insured’s who have had a change in health resulting in their life expectancy being 24 months or less. As we navigate this process we will need to be extremely sensitive to all of the other emotional issues facing our client.
She still has a need for at least $1M of life insurance, but we don’t want her to have to use her own dollars to pay for it. A life settlement in this situation may be her answer. I will keep you posted on the next phase of this case. Please visit our LIVEpdq website to stay tuned.