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Accountants and CPAs with senior, corporate, or charitable organizations as clients are in a position to offer increased value through an awareness of Life Settlements. CPAs are empowered when they have an understanding of the Life Settlement solution and when its application is appropriate.
CPAs are an integral part of the financial advising circle of advisors. As such, the ability to introduce Life Settlements to clients will provide a much needed financial planning tool.
The sale of life insurance policies through Life Settlements are an important aspect of both personal and business financial planning. Life Settlements have become an accepted strategy for CPAs when advising clients on estate planning, tax planning, and charitable donation matters. An increased awareness of this valuable tool could net your client substantially more than the cash surrender value offered by the insurance company. Life insurance policies with coverage not ideal for a client's needs, obsolete key man policies, policies with high premium payments, or expiring term policies are ideal to evaluate for Life Settlement prospects. Now, your clients can sell their policy(s) on the secondary market to maximize their asset's value and generate the highest return.
Life Settlements provide solutions for an individual's financial planning objectives
Clients age 65 and older can benefit from Life Settlements in the appropriate situation. Life Settlements will reduce costly premiums and increase cash for other uses. Below are just a few examples of how the proceeds of a Life Settlement transaction can be utilized:
- Finance long term care
- Estate planning changes
- Bankruptcy
- Provide liquidity for other investments
- Enable cash gifts to family members
- Create cash for living expenses or large purchases
Life Settlements in a business environment
Life Settlements have a valuable place in the business environment. Often overlooked, Life Settlements represent a new source of capital for profit, operating expenses, or debt reduction. Life Settlements may be appropriate for the following business scenarios:
- A life insurance policy required because of a small business loan is no longer needed because the loan is paid off
- A key executive has retired and coverage is no longer needed
- Finance life insurance premiums on retired executive's successor
- Business purchased or sold; key man and/or buy/sell no longer needed for an individual
- Infuse capital into a business for operating expenses, bridge periods of low revenues, or debt reduction
- Executive can retain policy after leaving company but is over insured or does not want to pay premiums
- Business sold and proceeds fund former owner's retirement
Life Settlements for charities
Charitable organizations often rely on CPAs as advisors to their financial affairs. When used properly, Life Settlements can effectively stabilize income and budgeting, while reducing the management burden of a life insurance policy. Charities that can leverage Life Settlements will find themselves in a better position to help their community and provide for the needs of their constituents. Examples:
- Avoid annual policy reviews, management costs, and record keeping of policies
- Eliminate expense of costly insurance premiums
- Use Life Settlement proceeds instead of drawing down other investments
- Immediate infusion of money allowing charity to use funds for various programs
- Tax deductions for donors
- Cash infusion from donated policy now verses waiting for death of donor
*See “Charities” section for additional information.