I had an interesting kaffeeklatsch a few days ago with professional advisor in the community who helps business owners with "comprehensive business value enhancement and transition strategy solutions."
In short, his company helps the exploding market of aging business owners (particularly aging Baby Boomers) maximize the value of their businesses and then sell them so they can get on with the next chapter of their lives.
But that is not the subject of today's blog post.
During our conversation, I also learned that he has another business, Sunflower Life Settlements, through which he helps retiring business owners (and others) "sell" any life insurance they no longer need or no longer want to fund with ongoing premium payments.
In fact, Drew recently penned an article on this very subject in the Kansas City Star titled "Your financial planner: Life settlements can be a lifeline for seniors."
So, how does it work?
In the article Drew illustrates a life settlement in the case of a 77-year-old gentleman with a $750,000 universal life insurance policy that has only $12,000 in cash surrender value.
This gentleman no longer needed the policy to cover the original reasons for its purchase.
However, he did need some extra cash - now - to supplement his retirement and for health care expenses.
Solution: Through a life settlement arrangement he was able to get $175,000 for the policy.
Even better, this gentleman has cash proceeds (from his own life insurance policy!) he can use as he pleases.
Nevertheless, there are a lot of moving parts to the "life settlement" option for "unwanted" life insurance.
Before making any decisions regarding a life settlement, be sure to consult a subject matter expert like Drew White (he is a CPA, to boot), your estate planning attorney, your accountant, and your life insurance professional.
Last, but certainly not least, be sure to consult your loved ones who otherwise would be the beneficiaries of the "unwanted" policy.
Teaching point: Your "unwanted" life insurance policy may not be as "unwanted" as you may think.
Rarely will you hear a widow complain about the life insurance her husband "had" when he passed.
Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.
For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri) and to download free tools to help you organize your estate, visit my estate planning website.
Reference: The Kansas City Star (May 27, 2015) "Your financial planner: Life settlements can be a lifeline for seniors"