A Beacon of Hope & Joy in the Holiday Season
In the heart of the holiday season, a time for family, reflection, and joy, lies the opportunity to reassess our life choices, especially our financial decisions. One such decision, often overshadowed by more traditional financial planning, is the life settlement. As an experienced professional in this field and the co-author of In the Know, I am here to guide you through the emotional and financial complexities of life settlements, illuminated by stories of individuals who found hope and renewal through this process.
The Transformative Power of Life Settlements
A life settlement is a financial transaction where an individual sells an existing life insurance policy to a third party for a one-time cash payment that is greater than the policy’s cash surrender value but less than its net death benefit. It involves the policyholder transferring ownership and beneficiary rights of their life insurance policy in exchange for immediate capital.
In practical terms, individuals who opt for a life settlement usually do not need the policy—perhaps because their dependents are now financially secure, their personal circumstances have changed, or they find the ongoing premium payments burdensome. By selling the policy, the original policyholder relinquishes any future claims to the policy’s benefits.
The buyer of the policy assumes responsibility for all future premium payments and, in return, receives the death benefit of the policy upon the original policyholder’s death. The attractiveness of a life settlement lies in its provision of immediate liquidity to the policyholder, often substantially more than the cash surrender value offered by the insurance company if the policy were simply terminated.
Life settlements offer a strategic financial option for policyholders, enabling them to reallocate funds to more immediate needs or investments while also relieving them of the obligation to continue premium payments. This transaction is particularly relevant for seniors over 65 or individuals with a change in their financial planning needs and health ailments. However, it is important for policyholders to carefully consider the implications, including loss of coverage and potential tax liabilities, and to consult with financial advisors to ensure that a life settlement aligns with their overall financial strategy. This decision can be a powerful tool for financial and emotional empowerment, especially during the holiday season, a time of deep reflection and family bonding.
The Stories
The Johnson Family: A Tale of Unity and Renewal
In the cozy setting of their home, where laughter and the aroma of holiday treats filled the air, George and Emily Johnson faced a pivotal financial decision. Retired and content, the Johnsons realized their life insurance policy, once a crucial part of their family’s financial plan, was no longer necessary. Their children, Laura and Michael, had grown into self-reliant adults, rendering the policy redundant. The Johnsons’ holiday gatherings, filled with warmth and reflection, became the stage for discussing this change.
After insightful conversations interspersed with moments of holiday cheer and storytelling, George and Emily decided to explore a life settlement. This decision, made amidst the festive ambiance, led them to consult with a financial advisor. The life settlement they ultimately chose provided them with substantial financial relief. With this newfound wealth, they embarked on adventures they had only dreamed of, traveling to distant lands, remodeling the house that echoed with decades of memories, and establishing a college fund for their grandchildren. This transformation, beginning in the heart of the holiday season, not only lifted a financial burden but also injected a renewed sense of excitement and purpose into their family celebrations.
A New Chapter for Business Partners in the Holiday Season
Two business partners, Robert and Lisa, had a life insurance policy tied to a buy-sell agreement, a testament to their foresight in securing their joint venture’s future. However, as their business evolved and personal lives took new turns, they found the agreement less relevant. In the midst of the holiday season, typically a time for Robert and Lisa to plan for the upcoming year, they recognized the need for change.
Encouraged by the season’s message of renewal and optimism, they chose a life settlement as the path forward. This decision, made as they shared holiday meals and exchanged stories of past successes and challenges, translated into a significant financial boon. The proceeds from the life settlement were used to reinvest in their evolving business and pursue personal aspirations long deferred. This strategic decision, nurtured in the spirit of the holidays, not only fortified their business’s future but also rekindled their personal passions, marking a festive season that was as transformative as it was celebratory.
Evelyn’s Holiday Reflection Leading to Estate Planning Adaptation
Evelyn Carter, amidst the peaceful quiet of the holiday season, found herself contemplating her estate planning strategy. Her life insurance policy, once a cornerstone in safeguarding her family’s future, seemed out of step with her current needs. Changes in estate tax laws and her own financial growth had shifted the landscape.
In this period traditionally marked by gratitude and family bonding, Evelyn contemplated the future of her legacy. Guided by the reflective nature of the season, she decided on a life settlement. This decision, influenced by the tranquility of the holiday period, provided her with the liquidity needed to realign her estate planning strategy.
This move was more than a financial adjustment; it was a testament to Evelyn’s adaptability and foresight. The resources garnered from the life settlement allowed her to invest in opportunities that mirrored her current goals and values. It also enabled her to contribute more meaningfully to charitable causes, a gesture that resonated deeply with the holiday’s spirit of giving. Evelyn’s story is a celebration of change and strategic thinking woven into the fabric of the holiday season, highlighting its potential to inspire thoughtful decisions and new beginnings.
If you are contemplating a life settlement, we invite you to contact us at Rosell Wealth Management. Our team is ready to provide you with the support, insights, and guidance you need to make a decision that brings financial ease and emotional peace of mind. As the holiday season envelops us in its warmth, remember that exploring the option of a life settlement could be your step towards a future filled with financial freedom and emotional enrichment. Contact us, and let’s explore how this choice can be your pathway to a brighter, more fulfilling future.
Rodney A. Cook CFP, author of In the Know — Turning Your Unneeded Life Insurance Policy into Serious Cash! is the Director of Financial Planning at Rosell Wealth Management in Bend. RosellWealthManagement.com. Investment advisory services offered through Valmark Advisers, Inc. an SEC Registered Investment Advisor. Securities offered through Valmark Securities, Inc. Member FINRA, SIPC 130 Springside Drive, Ste. 300 Akron, Ohio 44333-2431. 800-765-5201. Rosell Wealth Management is a separate entity from Valmark Securities, Inc. and Valmark Advisers, Inc.“Certified Financial Planner Board of Standards, Inc. (CFP Board) owns the certification marks CFP, CERTIFIED FINANCIAL PLANNER, and CFP (with plaque design) in the United States, which it authorizes use of by individuals who successfully complete CFP Board’s initial and ongoing certification requirements.” Each client’s experience varies, and there is no guarantee that a life settlement will generate an offer greater than the current cash surrender value. In such cases, the client can always surrender their policy to the carrier if the coverage is no longer needed. Valmark Securities supervises all life settlements like a security transaction and its registered representatives act as brokers on the transaction and may receive a fee from the purchaser. Once a policy is transferred, the policy owner has no control over subsequent transfers and may be required to disclosure additional information later. If a continued need for coverage exists, the policy owner should consider the availability, adequacy and cost of the comparable coverage. A life settlement transaction may require an extended period to complete and result in higher costs and fees due to their complexity. Policy owners considering the need for cash should consider other less costly alternatives. A life settlement may affect the insured’s ability to obtain insurance in the future and the seller’s eligibility for certain public assistance programs. When an individual decides to sell their policy, they must provide complete access to their medical history, and other personal information.
