Approaching the Conversation of Life  Settlements with Clients

Here are some suggestions for how to approach that conversation with clients in a way that’s sensitive to those professional instincts and respectful of your ethical duties to advise clients of their most appropriate financial planning options:

The Beginning - Start with the premise that a life insurance policy is a financial asset like any other asset in their portfolio. Life insurance is regarded as private property under federal law, which means your client has the right to sell it at any time if he or she so desires.

Then simply explain that at its core, a life insurance policy is just a contract between the client and an insurer, so selling that policy is simply a function of transferring the contract into the name of a new owner.

Remember to stress the importance of a non-emotional attachment when viewing financial assets. Just as your client shouldn’t feel an emotional connection to a stock or bond that would cloud his judgment about whether to keep it or sell it, he shouldn’t view his life insurance policy through an emotional lens. It’s another asset.

Finally, help your client understand that the decision to purchase life insurance in the first place was driven by his financial management and estate planning strategy. Those should be the same considerations now. Life insurance is ultimately a financial planning tool, and his policy should be evaluated like any other financial asset—how well is it performing today and is it still supporting his financial objectives now?

All professional advisors have a moral responsibility—if not a fiduciary duty—to understand and inform their clients about options available with unneeded or unaffordable life insurance policies, including a possible sale of the policy.

Don't sell this.... teach... When the client agrees with the idea, contact us.

Good Luck