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PROFILES OF RECENT POLICY PURCHASES By: Stephen M. Watson, Esq.
In a never-ending quest to show the financial versatility of our business, I thought it would be a good idea to profile a couple of the recent policy acquisitions by VSPI. In both cases, the policyholders found that the utility of the policies had ceased, and that it would be to their financial benefit to sell the policies. In the first case, a male, age 80, had $4,000,000 in various life insurance products, with an aggregate total cash value of $540,000. VSPI was able to negotiate a settlement payment of $1,000,000 to the policyholder for these policies -- $460,000 more than the cash value! When the policyholder decided these policies were no longer integral to his estate planning needs, he decided that he would investigate his three alternatives: 1) keep the policies and make the large premium payments until his death, at which time the total $4,000,000 death benefit would be collected (and estate taxes of roughly $2,200,000 ($4,000,000 x 55% = $2,200,000) would be paid); 2) surrender the policies now for their cash surrender value ($540,000); or sell the policies for $1,000,000. This sophisticated policyholder realized that it would be to his benefit to sell the policies, invest the proceeds, and relieve his portfolio of the future high premium payments. In his analysis, he determined that he would come out ahead, considering his life expectancy, if he invested the $1,000,000. In other words, he determined that the present value of the $4,000,000 at his death was lower than the value of taking the $1,000,000 now and investing it. In the second case, a male, age 68, had a $500,000 term life insurance policy. With a term policy, there is no cash surrender value, so when he decided he no longer needed the policy, he thought his sole option was to simply let the policy lapse (i.e., terminate the policy premium payments and allow the policy to cease under its own terms). But then he heard about our service and he quickly filled out an application and waited to hear what we could do. Normally, a male age 68 is too young to sell a policy, but in this case, the insured had previously suffered a bout with testicular cancer. In this case, however, the cancer had been caught early enough that surgery greatly increased the insured's life expectancy. Still, VSPI was able to find a buyer for his policy. The policyholder/insured was delighted when we came back with an offer of $25,000 for the policy that he was otherwise going to let lapse. The $25,000 more than paid him back for the premium payments he had invested in the policy, and the funds he received were unrestricted. He could pay off bills, buy a new car, or go on a dream vacation. Call or e-mail us for more information. Stephen M. Watson, President of Viatical Settlement Professionals, Inc., is an attorney and licensed Viatical Settlement Broker. He is a graduate of The University of Virginia, and Washington & Lee University School of Law. |
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