When talking about Term Insurance, most consumers believe that term is a term, and once that term ends, the policy can either be converted into a form of permanent insurance or ended as having served its purpose. This is true, but is that really all there is to term Insurance? Is term really only an affordable means to an end? Well, it is not…
You might think why a third party would purchase something with an expiration date, something that may expire in a few years leaving their “investment” absolutely worthless? The fact of the matter is, the underlying asset in a life insurance policy is the death benefit. The fact that the term has a conversion option and can be converted into something permanent keeps that underlying asset very valuable.
The vibrant secondary market for life insurance, otherwise known as a life settlement, is a financially rewarding alternative to lapsing or surrendering a policy. With term insurance representing a significant percentage of current life insurance in force and the fact that most policies are not converted, the life settlement option is truly one that should never be ignored.
Term polices for the most part never get converted to permanent insurance. Usually that is because the premium increase is very significant. The policy owner either has no interest in an increased premium obligation or because at that point in time, the policy as permanent insurance is not going to be needed. The policy conversion window is then allowed to expire. However many policy owners have not realized the true value of the policy. As a policy that could be converted to permanent insurance, the policy may have tremendous value in the secondary market. This is a value that you have a right to know about, a value you have earned. When deciding what to do with your term policy as far as conversion, policy owners must keep a life settlement in mind. If the policy is not going to be kept as permanent insurance, you owe t to yourself to see just how valuable your policy may be in the secondary market.
Even policies with several years left on their term may be sold under the right conditions. You do not have to wait until it is at the end of its term to be evaluated as a sellable asset.
Whether you are an Advisor or an individual who owns a term insurance, have a notification regarding the expiration of a possible term conversion window, or are just thinking of selling the policy, you owe it to yourself to call Genesis and see what your policy is really worth. Don’t allow your policy or your client’s policy to lapse – term policies are a true hidden asset!