LiST: A TRANSFORMED PLATFORM FOR FUNDING LIFE INSURANCE PREMIUMS FOR YOUR CLIENTS WHO OWN LIFE INSURANCE POLICIES
As a financial advisor, you’re always looking for programs that will help your clients maximize their revenue and minimize their risk. For clients who own life insurance policies, here’s a way for them to keep those policies while eliminating hefty premiums.
WHAT IS THE LIFE SETTLEMENTS MARKET AND WHY IS IT DIFFERENT THAN LiST?
The Life Settlement Market allows policyholders to sell their policies to third parties. They receive a fraction of the face value of the policy—but still more than they would get from surrendering the policy to the insurance company—and relinquish all connection to their policies. The Life Settlements Market has been in place for over 100 years, but many policyholders and investors are leery about participating, partly because of this market’s reputation for lack of transparency, exploitation, and incomprehensible dealings. Many financial advisors are not comfortable recommending the Life Settlements Market to their clients for the same reasons.
But now, the LiST platform makes funding insurance policies a valid choice, one that you and your clients can approach with a feeling of security because LiST’s platform is transparent, simple and clear. LiST has designed and built this platform, along with algorithms and simulation tools, that lay out dispersal rates throughout the life of policy. All parties to every transaction have a clear view of the transaction from beginning to end.
Another attractive feature of LiST is that policyholders do not surrender all connection to their policies; but rather, can retain a large portion of the proceeds of the policy for their loved ones. This dilutes the risk for both policyholder and investor. Investors minimize their risk because they can hedge their exposure by investing a small amount in many policies rather than being tied to the longevity of a single person. The policyholders’ risk is reduced because they are no longer paying the premiums. When the policy matures, the policyholder’s estate is still paid a portion of the proceeds of the policy.
By advising your clients to consider funding their insurance policy through LiST, you are providing them with an option that may improve their quality of life and free up significant cash immediately (by eliminating the need to pay premiums) and then again when the policy matures (because they have retained a portion of the maturity benefits).
WHAT BENEFITS CAN YOU OFFER YOUR CLIENTS THROUGH LiST?
There are sound reasons for Financial Advisors to recommend funding insurance policies, even to wealthy clients who are able to pay the premiums.
- Insurance policies, which are often multi-million-dollar assets, are controlled by a single variable—the longevity of the policyholder. There is therefore a significant chance that the yield will be low. Accepting an investor as a partner in that risk allows the policyholders to diversify their portfolios by using money that would have been paid to the insurance company to instead purchase less risky assets.
- A study by Insurance Studies Institute showed that 90 percent of seniors would consider funding their life insurance policies; they just don’t know how to do it or find that the details of the transactions are too complicated to navigate. Because of this, a Financial Advisor with expertise in the insurance industry can provide clients with an attractive alternative.
In addition, many policyholders have a personal attachment to their policies and are uneasy about selling them to strangers, especially if it requires revealing personal details to those strangers.
- LiST enables policyholders to retain a portion of the maturity benefit; they retain a connection to an asset that they have had for many years. The policyholder can share in returns from the policy without retaining a large low-yield, high-risk asset that is no longer necessary in his/her portfolio. Moreover, LiST’s platform allows them to upload their policy without divulging personal details to the end investor.
HOW HAS LiST MADE A DIFFERENCE?
- LiST has brought cutting-edge technology to an outdated market. This technology provides a secure, quality investing experience for policyholders and investors. Therefore, more investors are willing to invest in this market; competition among these investors will result in more revenue for your clients.
- LiST’s highly specific technology provides transparency by laying out what each party to each transaction can expect. Algorithms and simulation tables have been created that clearly present payment and dispersion rates over the life of the policy.
- LiST allows policyholders to retain a portion of the policy that they maintained for many years and to free up extra cash for their heirs right away (because they are not paying premiums) while still providing an estate when the policy matures—it’s the best of both worlds.
LiST offers an attractive alternative to the Life Settlements Marketplace—and you can help your clients enjoy the benefits.