Top Statistics You Should Know About Life Settlements
The landscape of retirement planning is evolving rapidly, especially as the baby boomer generation ages. This demographic, consisting of over 71.5 million individuals in the United States, faces more significant retirement challenges compared to retirees from a decade ago. The Stanford Center for Longevity highlights that baby boomers possess less wealth and carry more debt. They are also burdened with higher expenses in retirement.
This shifting financial landscape underscores the need for innovative financial tools like Life Settlements. Financial professionals who cater to retiring populations must recognize the utility of life settlements. Life settlements provide an avenue for policyholders to optimize their financial standing without the need for continuous premium payments.
An estimate indicates that $200 billion worth of life insurance lapses or gets surrendered each year in the U.S. Conning’s study reveals this sizable volume of lapsed policies. Such policies, if sold on the life settlement market, could potentially be worth $50 billion annually, assuming a payout rate of around 25%.
It’s not just about policy lapses; the financial benefits for policyholders are significant. On average, selling a life insurance policy can fetch policyholders four times more money than surrendering it. The statistics are staggering: 85% of term policies and 88% of universal life policies lapse or are surrendered. This situation places retirees in a difficult position, as they struggle to fund their retirement or find themselves unable to afford policy premiums.
Despite these benefits, awareness about life settlements remains low. A survey by the Insurance Studies Institute found that 90% of seniors who let their policies lapse would have considered selling them had they known about the option. Alarmingly, 49% of financial advisors fail to recommend life settlements due to a lack of knowledge. This gap in information not only affects clients but also places advisors at risk. Lawsuits against advisors for failing to present alternative exit strategies are becoming increasingly prevalent.
In 2020 alone, the life settlement market saw $4.6 billion of death benefits being purchased. This statistic highlights a market opportunity that many policyholders miss out on. Policies often lapse without providing benefits to the policyholder, representing a missed financial opportunity. If more policyholders and advisors were informed about life settlements, they could leverage this option to better secure financial stability.
Funds from selling a policy can be redirected towards medical expenses, long-term care, or reinvestments to achieve retirement goals. It’s a practical solution that meets the increasing financial needs of retirees. The life settlement option allows individuals to maximize the value of their life insurance, turning what would have been a lapsed policy into a beneficial financial asset.
Our website echoes the importance of utilizing life settlements effectively. We strive to empower our clients by providing comprehensive information and support. Our dedication to transparency ensures that policyholders and advisors have access to the best possible advice and services.
Life settlements stand out as a crucial tool for financial planning in retirement. With proper knowledge and guidance, it can transform how policyholders manage their life insurance assets. As we advocate for informed decision-making, we invite individuals and advisors to explore how life settlements can enhance their financial futures with us. We are committed to helping you and your clients make the most of their life insurance policies.
