Should Wealth Managers Help Clients with Selling a Life Insurance Policy?

Did you know you can sell all or a portion of a life insurance policy, even term insurance?

(4 minute read)

Clients depend on their wealth managers to help them make informed decisions regarding their finances and other critical assets. A wealth management consultant also plays a crucial role in developing financial wellness strategies that use life insurance as a convenient financial tool for their clients. Wealth managers are trained to effectively recognize the value of a life insurance policy and determine if selling the policy would benefit their clients. But where exactly do wealth managers fit in when it comes to selling a life insurance policy in a life settlement transaction? Let’s find out.

Wealth Manager vs Financial Advisor

“Financial advisor” is a broad term used to describe an expert who assists their clients with various financial services – typically financial planning and investment services. In comparison, wealth managers are a subset of financial advisors who only serve affluent clients and offer more extensive high-end services.

What is the Function of Wealth Management?

Wealth managers are types of financial advisors who offer comprehensive financial advice and preside over the complex financial needs of wealthy individuals. Because the economic situations that wealth managers handle are often multifaceted, they collaborate with teams of financial experts on behalf of their clients.  Although the wealth management process varies from client to client, some key elements set wealth management consultants apart from other financial advisors.

• Managing Affluent Clients – High-net-worth individuals have complex financial needs. When a client’s wealth is substantial, then more intricate management practices are required. Because of this, wealthy individuals need to employ a provider who will assist them in managing their finances and deliver solutions to fix current financial problems and prevent future difficulties. 
• Providing a Hands-on and Comprehensive Experience – Since they have more income to spare, wealthy individuals are open to working with a single provider to manage all the aspects of their financial lives. It is more beneficial for affluent individuals to take an integrated approach to their finances with a single advisor rather than piecing together advice and guidance from various professionals and agencies.
• Acting as a Fiduciary – Wealth managers are trained to evaluate all assets and provide sound financial advice to ensure that their client’s best interests are maintained. 

How Does Life Insurance Work with Wealth Management?

So, how does life insurance fit into the wealth management process? Organizing and overseeing a life settlement is an integral part of a wealth manager’s job since life insurance can be a valuable tool in an investment strategy. For example, a permanent life insurance policy increases in value over time. Should individuals lose money in their other investments, selling a life insurance policy is another way to generate cash instead of selling assets. This process can get complicated fast, especially for high-earning individuals. Therefore, it’s a wealth manager’s job to come in and help their clients understand different ways to incorporate life insurance settlements into their broader financial plans

Why pursue a life settlement?

Pursuing a life settlement comes into play if someone discovers they do not need or want their policy anymore. Working with life settlement companies is a reliable option for people to get a return on the investment they’ve made. In a life settlement, a person can expect to receive a lump sum greater than the policy’s cash value but less than the policy’s death benefit. As a general rule, a shorter life expectancy leads to a larger settlement, although this may vary between different types of life insurance. 

Who Qualifies for a Life Settlement?

Any life insurance policy can be sold so long as it is convertible to a permanent policy plan. In general, the main element to consider when qualifying for a life settlement is the age and health of the insured individual. The ideal client is a person in their mid-70’s or older that has had a change in health since the policy was issued. Term policies can be sold as long as they are convertible. An exception to this guideline would be a male or female in their 60’s to early 70’s that has multiple chronic medical conditions and a significant health change has taken place since the policy was issued.  For an insured to qualify, their life expectancy must be 15 years or less.

How much is a life settlement worth? Get in touch to find out. 

To summarize, wealth managers are a valuable asset to affluent individuals who need assistance managing their complex financial portfolios. Wealth managers are also beneficial when organizing and assessing the benefits of life settlements—interested in selling your life insurance policy? Get in touch with Life Settlement Advisors today to take the first step toward turning your policy into cash.

Did you know you can sell all or a portion of a life insurance policy, even term insurance? Selling an unwanted life insurance policy is no different than selling your car, home or any other valuable asset that will create immediate cash. Contact us today to learn more.

I am always happy to answer any and all questions about these life-transforming transactions.