Great write up on the use of life settlement calculators. My opinion after 23 years in the settlement space is that they are garbage and set false expectations. A client does not know his/her mortality and half the time doesn’t know premiums going forward.But again just my opinion. Calculators can give you a general sense of a “potential” offer range at best…
Life Insurance Settlements Broker - Helping Clients (and Their Advisors) Benefit from Their Unwanted or Unneeded Life Insurance Policies (714) 349-7981 - [email protected]
To Calculate, Or Not To Calculate - That Is The Question Sometimes, advisors will call to discuss a client's life insurance policy that is no longer wanted or needed, and during the conversation they ask "how much can my client receive by selling his/her policy?" Good question. The short (and accurate) answer is that it is not possible to know exactly what the number is until a client's policy is properly marketed by a life settlements broker. That being said, there are "calculators" on-line that claim to estimate life settlement value. But, should you use them? My advice - proceed with caution. Here's why: many calculators are simply not accurate and are lead generators. They only take a minute or two to complete, and portend to give the life settlement value, when in reality, they want the contact information of clients for follow up. The majority of calculators do not take into consideration the premiums that it will take to keep a client's policy in force into the future. They also do not take into account the specific life expectancy of a client. At best, these calculators are averages of what an entity pays for policies of a certain size, given various generic health statuses. There is a lot of room for interpretation, and in most cases, can set a client up for disappointment if marketing a policy produces lower offers. For example, a current client found a calculator on-line, inputting the information for his $400,000 term policy. Fortunately, he and I spoke beforehand, so I set expectations properly. But, he couldn't help it, he had to try (I get it). The results came back with a $200,000 value. I had to tell him that was not going to happen, and reiterated our past conversation as to why. Fast forward - the policy was fully marketed in the life settlement marketplace, and the result - $15,000. This is the fair market price for the policy. He is still happy, because this is a term policy that is ending, so he will receive something from a policy that he was going to walk away from with nothing. All is well. But, this example shows why there is no calculator on our website. All that being said, calculators can have their place. If you have a client that just wants to see if "it may be worth it" to them to market the policy, a calculator can give some ranges. As long as the client knows that the calculator results are not necessarily indicative of what they will receive, all is well. If you are curious, or if you have a client who is curious, click on the calculator link below. Feel free to peruse. But, please be careful so as to not set client expectations unrealistically. If you have a client who no longer wants, no longer needs or can no longer afford their life insurance policy, contact me. I am happy to discuss your client's policy any time to see if a life settlement can be an appropriate option. We're here to help. https://lnkd.in/eCh8D5Mg
