The secondary market for life insurance continues to evolve, creating new opportunities for financial professionals to help clients maximize the value of their existing policies. As individuals approach retirement and their financial needs change, life settlements can provide an alternative to surrendering or allowing policies to lapse.
During NAIFA's October 1 webinar, The Secondary Market for Life Insurance: Current Trends and New Applications, Peter Hershon, CLU, ChFC, Senior Vice President of Account Services at Coventry, discussed emerging trends, new settlement options, and strategies advisors can use to help clients evaluate their life insurance policies. The webinar was sponsored by Coventry.
Hershon explained that the life settlement market has expanded significantly beyond its traditional focus on older individuals experiencing major health changes. Today, policies covering younger and healthier individuals may also qualify for settlement opportunities.
Increased institutional investment has contributed to greater competition and potentially higher offers for policyholders. At the same time, changing retirement needs, rising healthcare expenses, and underperforming insurance policies are prompting more individuals to reconsider their existing coverage.
Hershon highlighted several developments expanding the applications of life settlements, including opportunities involving convertible term insurance, retained death benefits, and simplified settlement options.
Retained death benefit arrangements allow policyholders to eliminate future premium obligations while preserving a portion of their insurance benefit for beneficiaries. Meanwhile, Coventry's Enhanced Cash Value program offers certain eligible policyholders a settlement option without traditional medical underwriting.
Through real-world case examples, Hershon demonstrated how these strategies can help individuals generate retirement income, fund long-term care coverage, or maintain a portion of their life insurance protection while reducing expenses.
Hershon emphasized the importance of including life insurance policies in regular financial reviews. While advisors routinely evaluate investment portfolios and retirement strategies, existing insurance policies may receive less attention.
He encouraged financial professionals to revisit why a client originally purchased coverage, assess whether those needs still exist, and evaluate the policy's current performance and available options.
Although life settlements are not appropriate for every client, understanding the secondary market can help advisors identify overlooked opportunities and provide more comprehensive financial guidance.
Watch the full recording here.