Life Settlements, LISA Report Shows Average Of 7.8X More Money With A Life Settlement Than Cash Surrender Value
The Life Insurance Settlement Association (LISA) recently released a fact sheet for 2021. It detailed that insureds who took advantage of a Life Settlement averaged 7.8X greater return than the cash surrender value in a policy.
Let’s take that into perspective by providing a fictitious example:
A 78-year-old female has a Universal Life Insurance Policy valued at 5 Million dollars. A Cash Surrender Value of $100,000 and she no longer wants to maintain the policy. (The minimum face amount is $100,000, age 70 or older, younger if health concerns)
If she surrendered the policy, or turned it in for the Cash Surrender Value, she’d only get the $100,000 which would surely be significantly less than premiums paid in over the years. She would take a significant loss.
Instead, she meets with A Life Settlement Broker and after a few short weeks she’s presented with an offer around $500,000-$780,000. This number is vague because I do not want to provide an exact number. There are many factors that “go in” to a policy valuation. Health, cost of insurance, how long the policy will last, value of the policy and a ratio of premium to death benefit namely.
Nonetheless, by simply being better informed, she was able to at least 5X her money and at most 7.8X her return.
The great thing about exploring this option is that there is no obligation ever for an insured to sell their policy if dissatisfied with the valuation.
So, my suggestion to anyone considering lapsing a policy is to at least take the time to have it appraised, to see what the true value is prior to simply taking the Cash Surrender Value.
Carmelo Gagliotti
Private Wealth Management, Inc
Specializing In Life Settlements
850–322–1619
Carmelo.pwm@gmail.com
