Many members 60 or more years old can benefit from life settlements. The monetary benefits are far greater than other methods of discarding an unwanted life insurance policy. In many cases the policy is one they no longer need or want, has fulfilled its original purpose, or has premium amounts that have become financially burdensome or unaffordable. Methods of discarding policies include allowing the policy to lapse by not paying premiums, in which case there is no financial benefit. Another alternative is selling the policy back to the issuing life insurance company for a small cash surrender value. Life settlements are a better alternative. Life settlement qualification requirements are straightforward and easy to understand. There are no application fees. This option may be a very attractive financial benefit that many seniors do not know even exists. A life settlement is a way a baby boomer or a senior member can sell their life insurance policy for a price lower than its face value, but still at a very attractive price up to several times the cash surrender value. By selling their life insurance policies through a life settlement, members receive a lump-sum payment. A life settlement can supplement their retirement and pay for ordinary expenses such as food, mortgage, and prescriptions and even be used to pay off their mortgage, send the grandchildren to college or travel. The choice is theirs.
Some seniors may believe that life settlements fly in the face of their estate plans. They may have been planning to leave their money to families when they die. But, no family member would want to see their parents or grandparents suffer through their final years or have their retirements delayed or canceled entirely. Furthermore, these individuals can be careful with their money and still save for their estates.
Remarkably, 88% of universal life insurance policies never result in death benefit payments. And in the case of term life insurance policies, less than 2% result in a claim. In other words, 98% are surrendered or lapsed so the beneficiaries or policy owners never receive the face values of these policies.
Credit unions are also having difficult times financially. Members still want high dividends and low loan rates. Opportunities for lending are affected by their member's uneasiness when it comes to borrowing. Shares not loaned out are set aside for investments. Returns on investments are severely impacted by the low interest rate environment.
With life settlements, there is opportunity for credit unions to benefit financially through significant income opportunities. These can include sharing of commissions from the sale of the existing life insurance policy and conversion fees from converting a term insurance policy to a whole life policy prior to sale. Income to the credit union can increase based on volume of sales.
Bill Arnold is principle at WJA Consulting, Inc. He can be reached at 847-619-7668 or at firstname.lastname@example.org