Mature Market Experts Gem of The Day: Life settlements helping seniors fund their retirement needs
Mature Market Experts: More news and stats you can use on boomers, seniors and the mature market – Life settlements helping seniors fund their retirement needs – Let’s face it, the current economy has not been kind to seniors. According to the National Committee to Preserve Social Security and Medicare (NCPSSM), two new reports out this week put the recession’s effects on seniors into perspective. The National Retirement Risk Index shows that a majority of American households are at high risk of not having enough money in retirement. The 51% finding is the highest at-risk percentage since the index’ creation in 2006. The report concludes:
“Ensuring retirement security for an aging population is one of the most compelling challenges facing the nation. Yet the National Retirement Risk Index shows that in 2009 half of today’s households will not have enough retirement income to maintain their pre-retirement standard of living, even if they work to age 65, which is above the current average retirement age. Even if the stock market should bounce back, the housing bubble is unlikely to reappear. And as defined benefit plans fade in an environment where total pension coverage remains stagnant, Social Security’s Full Retirement Age moves to 67, and life expectancy increases, the outlook will get worse over time.”
Simply put, to be able to afford a move to your retirement community, assisted living, or skilled nursing facility seniors will need cash – now. As they morn their ravaged portfolios and real estate values, along with a freeze in Social Security income; the life policies that they have paid in to for most of their lives, have become one of the few assets they can sell and still make money on. Unfortunately, however, most are unaware of the opportunity these untapped assets present. Amazingly, 85% of life insurance policies never pay out. Why? As premiums rise most seniors just stop paying into the policy. The policy then eats away at its principal until it’s gone.
But that may be about to change. The mature markets’ need for cash has several people paying attention to life settlements. Life settlements which are transacted by trusted third party brokers like Live Free Capital. Live Free Capital works with reputable investors that pay the senior a substantially larger sum than what the life insurance company would pay (what insurance companies call the “cash surrender value”). The life settlement company pays the senior a large cash sum for the right to then take over their policy, paying the premiums along the way with the goal of collecting the larger cash settlement value upon the insureds passing away. In return, the senior gets to use this sizable cash payout when it will do them the most good … NOW, while they’re alive! According to industry expert Steven Morelli,
“That need has lead to more regulators and commentators starting to appreciate life settlements. Stories in mainstream media such as the Dallas Morning News and Newsday are encouraging seniors to consider the worth of their policies above their cash value. Settlements typically pay three to four times the cash value, usually 15 to 20 percent of the policy’s face amount. While that recognition grows, another movement is sprouting in state legislatures that could rip the market wide open. Just this year, first Washington State and then Maine passed laws requiring carriers to present the life settlements option to insureds who might be susceptible to cashing in or dropping their policies. At least three other states are reportedly considering similar regulations. This represents a significant about face for states, some of which make settlements difficult enough that companies have pulled out. Legislators and regulators have traditionally looked at settlements as inherently unseemly and as stranger-originated life insurance (STOLI) waiting to happen.
Why this change? Long-term care. The huge generation that rocked its way through the ’60s soon will be rocking on the porches of assisted-living centers, a short stop on the baby boomers’ way to the beds of nursing homes. Boomers’ bank accounts and investments will be no match for the enormous costs of extended care. LTC insurance still has not made a significant dent in this market. So, a large part of this population will spend down into Medicaid, which is shared by federal and state governments already struggling with the entitlement expense.”
In short, despite the insurance industry’s amazingly powerful lobbying efforts, two things are conspiring against their holding the life settlement industry down: (1) the economy has forced seniors and their families to consider creative new ways to fund their retirement needs … these families have also discovered that a life settlement will pay them far more than the insurance company will, and (2) the government needs seniors to pick up more of their retirement and health care tab if Medicare and Medicaid are to survive.
A Powerful Financial Tool For You And Your Clients
78% of US families own at least one life policy. Our experience with our current retirement community clients (national average age of entry into a continuing care retirement community is 80) is that 1 in 20 prospective residents will find a life settlement very useful towards solving some of their cash needs. My suspicion is that companies marketing assisted living, and nursing care will find similar statistics (although, in this case you’ll be educating the care giver.)
So, you’re interested in giving your sales team this powerful sales tool. What’s your next step? Live Free Capital specializes in teaming up with retirement communities, assisted living communities, and skilled nursing care facilities. Our firm, TR Mann Consulting, has been successfully using them to help boast our clients’ sales. Why? After interviewing several life settlement companies, we felt Live Free Capital shared similar values, ethics, and empathy for seniors that we have. They have an excellent training program to introduce this useful tool to your sales team and an infectious energy that results in increased sales for you. Also, unlike many other companies, they can handle policies as small as $50,000. In short, we highly recommend them.
To find out more visit Live Free Capital’s website or call them toll-free 877-300-5551. Or email me and I’ll introduce them to you.
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