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If you have read this section before, you might remember that the number above was about $300,000 less. The scenario is as stated below for a $677,000 life settlement. Insurance agents had told her to just stop making payments- certainly not to consider a life settlement.

Other agents told her that the CFP her mother had hired had done something wrong- but none could commit the illegal and unethical activity to a formal report. It took me over a year but the complaint went to arbitration and I got her an additional $300,000 settlement. You can read about the extra money here.  

There are millions and millions and millions of dollars that have been lost in the past when unneeded life insurance policies have been surrendered or lapsed.

There are millions and millions and millions of more dollars that will be lost now that estate taxes will be repealed and thousands of unnecessary policies lapsed since they are no longer needed.

Life Settlement Insurance Example on a $5,000,000 Universal Life policy, 77 year old woman, "good" health.

A year or so ago, I was approached by a woman in Maryland regarding inappropriate and unsuitable planning practices by their CFP Financial Planner located in Florida. I wrote a analysis that is the basis for a suit now filed.

As part of the research, this was noted. In 1990, the family had $5,000,000 in assets. The planner initiated an irrevocable life insurance trust to cover the estate taxes for an increasing asset base.

Over the next 10 years, the assets did not grow. But the planner flipped insurance policies twice increasing coverage to $5,000,000 at a cost of $206,000 annually.

The families income was just about $200,000. So the needed funds  for the insurance premiums had to be taken from an IRA. IRA's are taxed as ordinary income- meaning she had to take out about $300,000 to pay the $200,000 in premiums. She was running out of money.

(Beyond this, the planner had the daughter purchase two $2,000,000 costing over $64,000 annually. For a woman who never made more than $40,000 net. Further, the premium had to be gifted to an irrevocable trust. Once again, the before tax distribution had to be about $100,000. And gift tax reports had to be filed with the IRS.)

Other agents simply told her to terminate the policy and that would be that (there was no cash value).

I suggested she sell the policy instead. Anybody over age 70 generally is an acceptable candidate for a sale. Of course, the "sicker the better" and the "older the better" in terms of larger lump sum values.

I prepared proposals for several Life Settlement companies. Took about 2+ months

Just before Christmas, she received a lump sum check for $677,000.

She will now be able to live out the rest of her life comfortably without the undue strain of this financial burden.

Life settlements should be a consideration for anyone older than 65- depending on health- that has a policy that is too costly, not needed, etc. It can provide untold thousands rather than just terminating a policy and potentially receiving nothing.