I was referred to a potential client who was questioning if he should do a life settlement on his two life insurance policies. He is a retired male who had a decent amount of money and had a potential tax liability when he passes away.
Over the past couple of years he has lost 50% of his investments in the stock market and has a 2nd home that he bought as an investment in Arizona that he has been trying to sell and hasn’t been able to sell it. The cost of this 2nd home is about $1500 a month.
He has two Universal Life Insurance policies. One for $500K and the other for $430K. The premiums to keep these policies going are about 12K a year. He cannot afford to really keep them, his kids don’t have money to pay for them. They are the ones who will inherit the money when he dies. He called the insurance companies and if he stops paying the premiums for these two policies, they will last till age 82. He already has not paid this years premiums.
We are going to see what the best offer that we can get for him, if he decides to sell them. His financial planner is recommending that he sells the policies. He can invest the money and help this client with cash flow and that is what is needed at this time. There is no longer an estate tax issue and the kids will still have money and property to inherit.
My potential client met with his children to go over everything with them to make sure that they are ok with his decision if he decides to go through with it.
If you have any questions, please feel free to contact me anytime: Scott Zimmerman at American Insurance Network, Inc.
Scott Zimmerman
American Insurance Network, Inc.
American Insurance Network Blog 