Video Summary
Timestamps
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Chris and Crystal from the Life team at the brokerage.
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We are joined by a great partner of ours, Ryan
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Thompson, who's the founder of Policy Market.
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And he is one of the great minds in the
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life settlement space. And this is something that you may have heard
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of,
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but it is an important potential part
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of your overall conversations that you're having with your
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clients and your customers. And so,
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first of all, morning, Ryan, how you doing?
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Chris, Crystal, how are you doing today? Thanks for having me.
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And I certainly appreciate our partnership with the brokerage.
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Top-tier firm to work with.
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Gives us great resource, and they're able to offer great resource to
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their agents. So certainly take a look at what they have
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on their website, and if you have any questions, certainly any
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of us can help out with that.
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Thanks. Yeah. We're very excited about our life settlement
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business. And a lot of these things,
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oddly enough, take some interesting twists and turns, and Ryan has
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been a great partner in helping us navigate some of this.
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But let's back up and start really from the beginning, because
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we assume that everybody knows what a life settlement is.
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But
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Ryan, what is a life settlement?
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So a life settlement is,
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what it essentially is, is a payout to your client
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that is above cash surrender value and
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below the death benefit or face value of the
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policy. So it's somewhere in between.
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And it's essentially an exit mechanism for your
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client that meets certain criteria
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where if they no longer need their policy, they have a
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change in
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life events. This gives them, if they're a
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candidate, a way to get a premium on their
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cash surrender value, which sometimes is zero, and it's
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going to be below the death benefit.
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But what happens is an
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institutional investor will purchase the policy,
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take over the premiums. Right,
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Chris? Take over the premiums so your client no longer has an obligation.
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They get paid out
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the value of the policy, the market value of the
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policy, and when they
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pass, the investor will get the death
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benefit.
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Yeah. So really,
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life insurance, we've been talking about it for a long time, but it
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truly is an asset class. So this is an
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asset that somebody owns,
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and there are people that are willing to buy
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that for consideration, for a fee, and have that
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policy. Now, they would lose their ownership interest in
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that policy, and any death benefit would go to whoever buys
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the policy. Is that accurate?
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That's right. So the buyer will take ownership of the
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policy and also obligation for paying all the
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premium. And in return for that,
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the owner of the policy, the insured, doesn't
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have to be the insured, but the owner of that policy will be paid
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fair market value. And it's our job to get that
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fair market value as high as possible for our clients.
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And
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we can talk about how that works a bit later in the conversation,
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but that's the important component, is really understanding what the
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value of that policy is.
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Yeah. So
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many people,
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myself included, they buy a life insurance policy, and
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the place that life insurance policy goes is in the desk drawer
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to collect dust. So a lot of people don't even know
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what they have. So this is an opportunity to get
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those policies dusted off and really ask
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your clients, "Do you have some old policies that you're not knowing?"
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And every day,
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we get a call and they say, "We found a policy.
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We didn't know if it still is in force anymore."
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So a lot of people don't even know what they've got.
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Those are perfect opportunities to talk about a
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potential life settlement or
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maybe, gosh, the business market is a rich opportunity, isn't it?
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That's all those buy-sells and key person insurance.
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Wow.
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Those are two categories, Chris, that you mentioned that
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agents can take advantage of with their clients.
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And we like to talk with agents about doing an annual
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review,
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for one, with their clients to make sure that their
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life is still--
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They're in the same position of life as they maybe were from a
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planning perspective as when they took the policy out.
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It's always good to know what's going on with your clients'
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needs today, because they may have been different than when the client took a
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policy out 10 years ago.
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What this does is it
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opens up a conversation and perhaps something for the
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client has changed. Or in the case of a buy-sell
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agreement, maybe the business is getting ready to sell, and
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they have this policy that typically doesn't go with the
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business. The business may,
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or the ownership in the business may not
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want to keep paying that high premium, but there is
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value there. So if there's been a life change
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andOne thing that even
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accountants don't understand is many times a life insurance policy
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is in the top three assets of
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a
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client, and they don't know that they can have options and
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access to
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the value there. And with a life settlement,
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there's many, many different reasons why
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people sell their policies.
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No longer need,
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can't afford,
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change in
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family dynamics.
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You name it, it's happened. And,
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Chris can tell you, we've had some crazy ones, too.
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So there's nothing that we haven't seen.
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Right? And
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the main thing is understanding the needs of your client and knowing,
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having this in your back pocket that, hey,
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this actually is an asset, your policy, and let's see if
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we can meet some of your needs by unlocking that value.
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Yeah. And Ryan, what you've taught me is that there is a
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lot of wiggle room and play and
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discussion to have on this. So, a lot of times,
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somebody, when they were raising a family, they had
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a significant amount of life insurance, maybe a million or two million.
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And maybe now that your kids are grown and flown,
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they only need about a half a million, but they've got this million-dollar
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policy. So
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what can they do with that? Can they keep some of it and
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sell some of it? What's the flexibility there?
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Yeah. That's certainly an option, Chris, is they call that
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a retained death benefit where there
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are buyers that will
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provide, take and fully control the policy, but then
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have a payout
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upfront and then a payout
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when the policy matures. So those are all options.
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That works better with larger policies.
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The more face value that you have to work with, that
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becomes more attractive to
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the buyers. But we've done
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many deals that way.
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Got you. And you could even split the policy, I guess, too.
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So you could just say you got a million-dollar policy, for example.
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You could split it and have a half a million and keep it and
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take the other half million and see if you could do a life
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settlement on it.
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That's right. And I think that the important thing here is that
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we've seen,
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look, new things come across our desk every single day,
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but we
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have enough experience in the space over the 30 years of experience
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we have in our team to be able to
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consult and look at each individual situation
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and advise as to here are a few options that we can
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talk about. So it is important if
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an agent or
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any of your clients have questions, just bring them
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up and send information in, and then we can follow up and see
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how we can help. Because
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each one of these situations is typically unique, and
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it's important to
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get a good understanding from somebody that's on
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your side and on your team, not somebody that's trying to
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take advantage of
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your client.
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So that's a great lead in. How is
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a value of a policy determined? How do we look to see
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what a potential value would be?
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So,
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we can start with the types of policies that we look for.
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And
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not to say that
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the most,
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I would say, popular policies or the ones that we really
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focus on are universal life, guaranteed
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universal life. We sell term and term
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conversions, so if there's room in a term where the policy can be
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converted, we can convert and sell.
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Whole life doesn't really work.
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There is a
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few cases, but it's really universal life, guaranteed universal
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life, and term. And they also have all
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different criteria amongst those categories.
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But I will say that typically policies
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200 to 250,000 and above are where
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I would say it starts to make sense.
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We've sold policies for 100, we've sold policies for
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50,000, but typically when you're looking to identify
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a good candidate, it's 200 to 250,000 plus.
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Okay?
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Another
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real factor is the age of the client.
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So typically 70 to 75 plus
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or a significant change in health since the policy was
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taken out. We've sold policies for
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40-year-olds, 50-year-olds, 60-year-olds.
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We can also sell policies for healthy individuals.
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Those typically are guaranteed universal life policies, so you
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have a little bit more flexibility with health.
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And
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really how it works is we get to look
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today at what the underwriting is,
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versus when the underwriting was done when the policy was
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taken out. And
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the important thing is that there's some sort of arbitrage there
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where there's an advantage to the buyer and an advantage
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to the seller.
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Okay. So,
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basically what you're wanting to do
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is take a snapshot of what their current health
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picture is and then from that
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try to arrive or guesstimate what a life
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expectancy might be.
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Correct.
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And then from that,
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you can start gathering offers.
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Right. Basically.
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And so you're looking at life expectancy, and then you're also looking at the
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underlying policy.
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I think, when we do these, you want to see how this
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policy performs out to 100. Is that
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typically?
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Yeah. So, for
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GUL policies or conversion policies, it's out to
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100. So we look for level
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premium, level death benefit to age 100.
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That's an illustration that we like to see.
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For universal
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life, it's a little bit different because we can sell UL
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policies for healthy younger individuals, around the
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70-year-old plus,
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a little higher for women. And those many times we
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don't even need medical
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underwriting done. And so those policies would be to age 105.
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So if you were to, and I've seen this
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before
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with you, that it depends so much on the
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life expectancy, which is pegged to health, really.
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So if you've got somebody that...
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I know we've had a couple of examples where they really need some cash, but
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they were maybe diagnosed with cancer recently, and their life
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expectancy is short.
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That potentially is something that you could do pretty
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quickly, get them cash in their pocket very, very
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fast in the time they need it. And those offers typically would be larger
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than a healthier person?
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For sure, yeah. Certainly, it all comes down to life
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expectancy. In
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cases with cancer, those
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policies are certainly,
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I would say,
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on the higher valued side. But it's important, we work
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for
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you and your client. We're not the buyer of the policy.
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What we do is we go out to the entire market
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and find the best value for your client.
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So we are not the
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buyer. We are representing the seller, which is an important
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distinction because
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00:14:51.900 --> 00:14:52.220
if you,
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00:14:53.840 --> 00:14:57.820
as an agent or as a policy owner, if you just call
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up, say, let's just use a couple of them that you may have seen commercials
269
00:15:01.680 --> 00:15:01.950
on,
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00:15:02.940 --> 00:15:06.020
a Coventry or an Advicor, they're
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looking to get the
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best returns and the lowest value, even though they may not
273
00:15:15.160 --> 00:15:18.980
say that, but they're buying on behalf of their fund.
274
00:15:19.570 --> 00:15:23.320
We are selling on behalf of your client, and we
275
00:15:23.380 --> 00:15:26.290
understand the value of the policy, and then
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00:15:27.540 --> 00:15:31.460
we leverage the different buyers throughout the entire
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00:15:31.520 --> 00:15:34.540
market to keep pushing that value up.
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And so that's the important distinction between going
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00:15:38.120 --> 00:15:41.640
direct versus coming to us as a team,
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00:15:42.220 --> 00:15:45.280
because you will win every single time
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00:15:46.540 --> 00:15:50.460
coming in and exploring the entire market and knowing the value of
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00:15:50.520 --> 00:15:53.600
the policy, because they're not going to tell you what the policy's worth.
283
00:15:55.360 --> 00:15:59.320
That's a really great point because I'll tell you, I don't think I can be in
284
00:15:59.340 --> 00:16:03.320
the car more than about 20 minutes before a commercial for
285
00:16:03.360 --> 00:16:05.520
a Coventry or somebody comes on.
286
00:16:06.380 --> 00:16:10.280
And they make it sound great. It is great that
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00:16:10.920 --> 00:16:10.980
they
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00:16:11.960 --> 00:16:15.409
sell their policy and now they can travel and put their grandkid through
289
00:16:15.460 --> 00:16:16.330
college and
290
00:16:17.320 --> 00:16:21.140
live a free and easy existence. But what you
291
00:16:21.240 --> 00:16:25.099
offer is something better because you've got a number of
292
00:16:25.140 --> 00:16:28.360
different buyers instead of just one or two.
293
00:16:29.049 --> 00:16:32.320
That's right, a number of different buyers, and we're not
294
00:16:32.380 --> 00:16:35.920
leaving any money on the table. Oftentimes, a
295
00:16:39.120 --> 00:16:42.920
lot of times from initial offers to where we settle can be
296
00:16:42.980 --> 00:16:46.650
two times. Okay? And so that's
297
00:16:46.760 --> 00:16:50.590
because of our long history with working with
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00:16:50.720 --> 00:16:54.580
all of the entire market, knowing what the policy is worth, and
299
00:16:55.700 --> 00:16:58.799
playing the game against each other. Right?
300
00:16:58.880 --> 00:16:59.040
They
301
00:16:59.960 --> 00:17:03.720
are not incentivized to bring that number
302
00:17:03.820 --> 00:17:07.600
up unless they have a reason to for your client, but we are.
303
00:17:07.760 --> 00:17:11.320
Right. And it's not that you're-- You're talking to the
304
00:17:11.340 --> 00:17:15.000
Coventrys of the world, so they're one of the people that you talk to
305
00:17:15.360 --> 00:17:19.320
secure offers, right? So, it's not like you're not talking
306
00:17:19.340 --> 00:17:23.020
to them, but you're just sort of working with different
307
00:17:23.100 --> 00:17:26.940
ones to see who has the best offer. And I've seen you even go and
308
00:17:27.000 --> 00:17:27.421
say, "Well,
309
00:17:29.360 --> 00:17:32.300
XYZ buyer was offering X, and
310
00:17:32.860 --> 00:17:35.020
ABC buyer is offering Y.
311
00:17:36.000 --> 00:17:37.930
Can you do a little better?" And you-
312
00:17:38.620 --> 00:17:39.380
We do that every
313
00:17:40.360 --> 00:17:43.600
time. Right? And it's also the starting point, right?
314
00:17:43.740 --> 00:17:44.940
Because if
315
00:17:45.900 --> 00:17:46.260
you don't
316
00:17:47.380 --> 00:17:50.730
come in knowing what that policy is
317
00:17:51.120 --> 00:17:54.440
worth and knowing how to get the deal done,
318
00:17:54.520 --> 00:17:58.380
because there's two sides of this, and Chris, you've been with me
319
00:17:58.420 --> 00:18:02.020
long enough to see, there's getting an offer and then getting
320
00:18:02.300 --> 00:18:04.900
the money in the bank, and those are two different things.
321
00:18:04.980 --> 00:18:08.180
Anyone can tell you, "We'll pay this," but then all of a
322
00:18:08.300 --> 00:18:11.730
sudden, when you start going down the road towards closing,
323
00:18:12.220 --> 00:18:15.700
that's when it can get more difficult to actually get the money in the bank.
324
00:18:15.860 --> 00:18:19.684
And you don't want to blow upA lot of time and effort
325
00:18:20.224 --> 00:18:24.204
and have an issue with your client because you can't deliver
326
00:18:24.264 --> 00:18:24.984
on that offer.
327
00:18:26.444 --> 00:18:30.404
Exactly right. Well, so we
328
00:18:30.444 --> 00:18:33.864
talked about that. Now, I know that there is
329
00:18:34.724 --> 00:18:36.864
some compensation involved here, too.
330
00:18:36.984 --> 00:18:39.564
So how would an agent that brought a case
331
00:18:40.664 --> 00:18:42.144
to us be compensated?
332
00:18:43.424 --> 00:18:46.524
So, we typically look at it
333
00:18:46.724 --> 00:18:50.084
in 80/20,
334
00:18:50.224 --> 00:18:53.844
so 80% of the deal go-- And this is value
335
00:18:54.044 --> 00:18:56.804
add. So this is above cash surrender.
336
00:18:57.224 --> 00:18:58.394
80% of
337
00:18:59.844 --> 00:19:03.824
the offer go, this is back of a napkin, and every deal can be a little
338
00:19:03.864 --> 00:19:07.704
bit different depending on tolerances and the size of the deal, but it's
339
00:19:07.764 --> 00:19:11.704
typically 80% goes to the client, 20%
340
00:19:11.764 --> 00:19:14.804
goes into compensation, and then that pool is broken up
341
00:19:15.124 --> 00:19:15.764
amongst-
342
00:19:18.924 --> 00:19:19.834
Whoever the parties are
343
00:19:19.844 --> 00:19:22.164
... yeah, the parties involved. Yep. That's how that works.
344
00:19:22.974 --> 00:19:25.904
Got it. And there is, like you said, it's not in stone.
345
00:19:26.924 --> 00:19:28.944
Every situation has its own
346
00:19:29.984 --> 00:19:32.704
peculiarities, and I remember we had one
347
00:19:34.104 --> 00:19:35.894
several years ago that
348
00:19:36.744 --> 00:19:38.284
the fellow was in
349
00:19:39.324 --> 00:19:43.224
the late stages of cancer and had not years to
350
00:19:43.304 --> 00:19:47.204
live, but months to live, and the agent knew that he
351
00:19:47.264 --> 00:19:49.084
needed to have that money, so he
352
00:19:50.424 --> 00:19:53.584
wanted to take the very smallest amount of
353
00:19:53.644 --> 00:19:56.824
compensation to get that to him. So there is
354
00:19:57.684 --> 00:19:59.364
flexibility there.
355
00:20:01.064 --> 00:20:04.824
But we have to see the offer first before we can talk about that.
356
00:20:04.904 --> 00:20:08.584
So, it's hard to talk specifics until we have a specific
357
00:20:09.164 --> 00:20:10.664
case to work on, I guess.
358
00:20:10.744 --> 00:20:13.584
That's right. We never let
359
00:20:14.224 --> 00:20:17.164
compensation get in front of getting a deal done.
360
00:20:17.224 --> 00:20:21.204
That's just not how we work. And there's always flexibility in
361
00:20:21.264 --> 00:20:24.904
how that all comes together, and it's typically driven
362
00:20:25.004 --> 00:20:27.604
by the deal, but those are back of the napkins.
363
00:20:28.044 --> 00:20:31.324
Of course, if you have a $10 million policy,
364
00:20:31.384 --> 00:20:34.904
that may not be the same numbers as a
365
00:20:34.914 --> 00:20:38.764
$250,000 policy. But that gives you a
366
00:20:38.804 --> 00:20:39.884
general idea.
367
00:20:40.544 --> 00:20:40.804
Yep.
368
00:20:41.764 --> 00:20:45.544
So I'm sure, and I know we've got some questions that
369
00:20:46.624 --> 00:20:48.304
we'll get to in just a second, but
370
00:20:49.564 --> 00:20:53.344
if an agent has a case in mind, how would they get
371
00:20:53.404 --> 00:20:54.524
started on this path?
372
00:20:55.744 --> 00:20:56.324
Well, I think,
373
00:20:57.584 --> 00:21:00.024
Chris, on your website, you do have a-
374
00:21:00.524 --> 00:21:00.554
Yeah
375
00:21:00.554 --> 00:21:04.484
... a questionnaire that we use to
376
00:21:05.724 --> 00:21:09.424
qualify, pre-qualifying worksheet. Oh, you've got it? That's great.
377
00:21:09.664 --> 00:21:13.104
Yeah. This is on our website, on the broker link.
378
00:21:14.064 --> 00:21:17.724
If you go to Insurance Products, under the Life
379
00:21:17.764 --> 00:21:21.504
Hub, you'll see Additional Products, and there will be
380
00:21:21.584 --> 00:21:25.484
Life Settlements. And you can either download the
381
00:21:25.564 --> 00:21:29.324
worksheet to bring with you to a client meeting
382
00:21:29.784 --> 00:21:32.524
or fill it out direct from our website.
383
00:21:32.564 --> 00:21:36.444
And it's some basic information to sort of narrow
384
00:21:36.484 --> 00:21:39.304
down. So, is the person generally healthy?
385
00:21:39.324 --> 00:21:40.024
Is the person
386
00:21:41.224 --> 00:21:44.984
really unhealthy? What's a general type of policy it
387
00:21:45.084 --> 00:21:45.404
is?
388
00:21:46.324 --> 00:21:50.013
If there is a permanent insurance, what's the cash
389
00:21:50.013 --> 00:21:51.984
surrender and premiums look like?
390
00:21:52.684 --> 00:21:53.964
The age, of course,
391
00:21:55.084 --> 00:21:58.484
and age and sex of the insured is
392
00:21:58.964 --> 00:21:59.884
very important.
393
00:22:01.124 --> 00:22:03.224
And this will give you a score.
394
00:22:04.564 --> 00:22:07.964
This is something that you want to talk about right away.
395
00:22:08.024 --> 00:22:11.604
So you'll get this, and if it's something that looks like, man,
396
00:22:11.744 --> 00:22:14.624
I need to call this client right now
397
00:22:15.904 --> 00:22:19.864
and get this policy to TBI. And what we go
398
00:22:20.064 --> 00:22:22.484
from there is that we have a
399
00:22:24.164 --> 00:22:28.144
short form that Ryan's developed, and basically what it is,
400
00:22:28.204 --> 00:22:29.004
it gives you
401
00:22:29.824 --> 00:22:31.444
permission for us to--
402
00:22:33.324 --> 00:22:35.684
Gives HIPAA permission for us to gather
403
00:22:36.504 --> 00:22:40.244
some medical information, and we will do all of that for you.
404
00:22:41.104 --> 00:22:43.264
So we'll gather the medical information.
405
00:22:43.404 --> 00:22:47.184
We will help secure the policy ledgers that
406
00:22:47.224 --> 00:22:51.024
Ryan needs to do his job, and then he goes to
407
00:22:51.044 --> 00:22:53.264
town on this. And
408
00:22:54.404 --> 00:22:58.354
it does take some time. It takes a little time to gather medical records,
409
00:22:58.444 --> 00:23:01.324
but in today's day and age,
410
00:23:02.444 --> 00:23:05.504
that's not a six-week issue like it used to be.
411
00:23:05.624 --> 00:23:09.504
Most people have easy access to their medical
412
00:23:09.584 --> 00:23:10.864
records. I can
413
00:23:11.784 --> 00:23:15.724
get on my doctor's website today and pull all my medical
414
00:23:15.764 --> 00:23:19.664
records down from the computer in about two minutes.
415
00:23:19.674 --> 00:23:23.504
So that process is a lot easier than it used to be.
416
00:23:23.944 --> 00:23:26.824
Yeah, that's a good point, Chris. We see
417
00:23:27.584 --> 00:23:31.524
a lot of clients deciding that that's the easier way to go
418
00:23:31.624 --> 00:23:34.964
because everyone really wants to get to, okay, what
419
00:23:37.364 --> 00:23:41.264
is the value of my policy? And a lot of the time in
420
00:23:41.314 --> 00:23:44.964
the process is getting medical records from doctors
421
00:23:45.584 --> 00:23:48.944
if that's necessary. Sometimes we don't even need medical records.
422
00:23:49.024 --> 00:23:52.744
It all depends on the case, so it's good to just upfront
423
00:23:52.844 --> 00:23:53.144
get
424
00:23:54.184 --> 00:23:57.704
the information about the case so we can offer guidance there.
425
00:23:58.484 --> 00:23:58.764
But
426
00:23:59.824 --> 00:24:03.684
one of the ways to really significantly cut down time to
427
00:24:03.824 --> 00:24:07.064
offer is going on the portal,
428
00:24:07.324 --> 00:24:08.144
downloading
429
00:24:08.964 --> 00:24:09.784
medical records.
430
00:24:10.904 --> 00:24:12.164
My parents
431
00:24:13.044 --> 00:24:14.264
who are
432
00:24:15.324 --> 00:24:18.734
older now, all their medical records are
433
00:24:20.124 --> 00:24:24.064
online and-I can get that
434
00:24:24.124 --> 00:24:27.944
stuff very quickly. So that's something that would really cut down the time, and
435
00:24:28.024 --> 00:24:29.244
it's the way to go these days.
436
00:24:30.004 --> 00:24:33.744
Got you. And then once you get all the information, it takes
437
00:24:33.824 --> 00:24:37.564
you a week, two weeks to go through the
438
00:24:37.624 --> 00:24:39.804
bidding process and find the best offer?
439
00:24:40.384 --> 00:24:43.284
Yeah. What we'll do then is once we
440
00:24:44.644 --> 00:24:46.024
get a handle on the case,
441
00:24:47.424 --> 00:24:51.204
we can give you a pretty good idea of where it will come in,
442
00:24:51.524 --> 00:24:55.494
and then that way the agent can
443
00:24:55.543 --> 00:24:57.834
talk with their client and see if
444
00:24:57.924 --> 00:25:01.444
that's something that they want to
445
00:25:01.684 --> 00:25:05.334
continue going forward with so that they can keep that conversation going,
446
00:25:05.784 --> 00:25:09.684
and then we will go out and then we'll push to get
447
00:25:09.724 --> 00:25:13.284
the highest offer. So we can certainly give guidance throughout
448
00:25:13.544 --> 00:25:17.464
the process so that you have good information to talk with your
449
00:25:17.544 --> 00:25:19.224
clients about.
450
00:25:19.344 --> 00:25:23.304
So when they sign that authorization to go out for information, it
451
00:25:23.324 --> 00:25:26.684
does not obligate a client to anything, really.
452
00:25:26.804 --> 00:25:30.444
It just gives us permission to go out and find the best
453
00:25:30.664 --> 00:25:31.164
offer.
454
00:25:32.684 --> 00:25:36.404
At that point, when they find an offer they like, that's
455
00:25:36.504 --> 00:25:38.584
when you would provide the paperwork.
456
00:25:38.594 --> 00:25:40.484
And it's sort of like buying a house, I guess.
457
00:25:40.524 --> 00:25:43.684
So, you say, "Gosh, I love this house. I want to buy it.
458
00:25:44.624 --> 00:25:48.604
Let's draw it up." But if they decide they want to buy
459
00:25:48.644 --> 00:25:49.684
it for that price,
460
00:25:50.504 --> 00:25:53.224
then you provide some paperwork for them, right?
461
00:25:53.264 --> 00:25:53.684
That's right.
462
00:25:54.944 --> 00:25:58.564
This process is highly regulated
463
00:25:59.144 --> 00:26:02.844
from state to state, always to protect the
464
00:26:02.904 --> 00:26:06.384
policy owner, the seller. It's never to protect
465
00:26:06.684 --> 00:26:08.284
anybody but that. Right? So
466
00:26:09.624 --> 00:26:11.644
there's no obligation
467
00:26:12.924 --> 00:26:14.844
from getting an offer.
468
00:26:15.764 --> 00:26:16.104
Even
469
00:26:16.944 --> 00:26:20.424
after close, Chris, after everything's signed, there's still a
470
00:26:20.464 --> 00:26:24.424
15-day window where a client can have a look-back
471
00:26:24.564 --> 00:26:28.444
period. So everything is in place to protect the client and give
472
00:26:28.504 --> 00:26:32.184
them the most options and
473
00:26:32.224 --> 00:26:32.944
flexibility.
474
00:26:34.044 --> 00:26:34.093
Got it.
475
00:26:34.093 --> 00:26:36.124
But there's no obligation.
476
00:26:37.524 --> 00:26:41.064
Right. And so I guess the big
477
00:26:41.184 --> 00:26:41.544
time
478
00:26:43.864 --> 00:26:47.724
drainer on this is once they sign it, then that change of
479
00:26:47.784 --> 00:26:49.194
ownership has to go to the
480
00:26:51.104 --> 00:26:54.944
appropriate insurance company, and then they have to do a change of
481
00:26:55.004 --> 00:26:58.644
ownership, change of beneficiary, all of that jazz, which
482
00:26:59.144 --> 00:27:02.964
the process of some insurance companies takes a little longer than some others.
483
00:27:03.064 --> 00:27:06.564
So that might take a little time before it's
484
00:27:06.664 --> 00:27:08.564
all done deal. But-
485
00:27:08.624 --> 00:27:08.744
Yeah
486
00:27:08.824 --> 00:27:09.344
... we push.
487
00:27:09.864 --> 00:27:13.264
Each carrier is different. Each deal is different.
488
00:27:13.364 --> 00:27:14.054
Sometimes
489
00:27:15.444 --> 00:27:18.924
we can work with the client if they need funds quicker.
490
00:27:19.144 --> 00:27:22.304
That's always something that we can consider getting done.
491
00:27:24.164 --> 00:27:27.974
The best thing is just keep the process moving forward, find out
492
00:27:27.984 --> 00:27:28.864
what the
493
00:27:29.784 --> 00:27:32.174
exact needs are of the deal, and
494
00:27:33.164 --> 00:27:36.584
then we can usually accommodate to make sure
495
00:27:36.594 --> 00:27:40.494
that everyone on our team and our
496
00:27:40.544 --> 00:27:41.114
side is
497
00:27:42.864 --> 00:27:45.804
taken care of, looked after the best in the business.
498
00:27:46.724 --> 00:27:49.364
Perfect. Yeah. It's a great process.
499
00:27:49.464 --> 00:27:53.404
It is really an important tool that a lot
500
00:27:53.464 --> 00:27:57.284
of our advisors don't think about, but look for these
501
00:27:57.324 --> 00:28:01.064
policies. As Ryan said, think
502
00:28:01.184 --> 00:28:04.464
about doing regular policy reviews to try to
503
00:28:04.544 --> 00:28:08.344
uncover some of these opportunities that exist out there.
504
00:28:08.404 --> 00:28:11.524
Because it really is an exciting market.
505
00:28:12.604 --> 00:28:14.444
With that, I know we've got a couple-
506
00:28:14.504 --> 00:28:14.514
Chris?
507
00:28:14.524 --> 00:28:14.904
Yes, sir.
508
00:28:15.204 --> 00:28:17.944
Yeah. And I just want to add to that because you make a great point.
509
00:28:18.004 --> 00:28:21.944
This gives the agent a great tool, and it
510
00:28:21.984 --> 00:28:22.964
does twofold. Right?
511
00:28:24.024 --> 00:28:25.284
Many times, the agent
512
00:28:26.424 --> 00:28:28.264
was the one that sold the policy. Right?
513
00:28:28.344 --> 00:28:32.204
So if there was a life change where the policy's no longer
514
00:28:32.244 --> 00:28:36.164
needed or a different requirement at a certain point in time, the
515
00:28:36.224 --> 00:28:39.784
agent really looks like a hero to their client when they can say, "Hey,
516
00:28:40.484 --> 00:28:44.444
here's actually an option where you have this asset that you've been putting money
517
00:28:44.524 --> 00:28:48.384
into, premium into, and now you can get a benefit today
518
00:28:48.444 --> 00:28:52.304
that you need. And so let's explore this." So they've
519
00:28:52.384 --> 00:28:56.324
sold the policy, and now they're offering another option to their
520
00:28:56.384 --> 00:29:00.374
client to show that they're providing value throughout
521
00:29:00.404 --> 00:29:04.164
that whole relationship. Of course, life insurance is a lot
522
00:29:04.204 --> 00:29:06.084
about trust, and
523
00:29:07.404 --> 00:29:11.304
keeping that trust with your clients is really important and showing them
524
00:29:11.384 --> 00:29:15.224
that you're there for them, and this is an option that they may want to
525
00:29:15.264 --> 00:29:17.644
consider either today or down the road.
526
00:29:18.004 --> 00:29:21.974
But at least if they're talking about it, that is something that goes a
527
00:29:22.044 --> 00:29:25.634
long way with their clients, and I think it's an important
528
00:29:26.144 --> 00:29:26.464
thing.
529
00:29:27.644 --> 00:29:31.174
Well, yeah. You said it. It is important, and there's some real
530
00:29:31.264 --> 00:29:34.304
opportunities there. And you mentioned one thing, too.
531
00:29:34.764 --> 00:29:38.664
You don't have to be the writing agent to find a
532
00:29:38.744 --> 00:29:42.604
settlement offer on it. So if there's a policy that another agent sold,
533
00:29:43.124 --> 00:29:46.884
you can still do the settlement and do
534
00:29:46.944 --> 00:29:50.404
that on behalf of the client. Just like a term conversion.
535
00:29:50.444 --> 00:29:53.644
If somebody else sold a policy, a term policy,
536
00:29:54.564 --> 00:29:56.244
you might advise them to convert it.
537
00:29:56.404 --> 00:29:59.044
If you convert it, you get the commission on that as well.
538
00:29:59.204 --> 00:30:00.804
So there are opportunities there.
539
00:30:00.884 --> 00:30:04.104
So Ryan's a rich source of information.
540
00:30:04.504 --> 00:30:08.424
Put your questions in the chat. Crystal, do we have a couple of questions in there?
541
00:30:09.504 --> 00:30:13.314
I believe there is one that I might have missed because I was taking some notes,
542
00:30:13.384 --> 00:30:17.044
but there was a question about are there tax implications when a
543
00:30:17.104 --> 00:30:18.464
policy is sold?
544
00:30:20.444 --> 00:30:22.784
So that's a great question, and something
545
00:30:22.844 --> 00:30:26.548
that-is important
546
00:30:26.728 --> 00:30:27.068
for
547
00:30:28.528 --> 00:30:32.468
clients to understand, and I will always advise, and I
548
00:30:32.508 --> 00:30:32.988
think
549
00:30:34.188 --> 00:30:34.428
most
550
00:30:35.548 --> 00:30:39.088
will, that it's the most important to talk to their
551
00:30:39.148 --> 00:30:43.028
accountant about this, but here is how it works.
552
00:30:44.668 --> 00:30:48.068
So there's three pieces to
553
00:30:48.928 --> 00:30:51.408
how the taxes work on the sale of a policy.
554
00:30:51.468 --> 00:30:55.448
There's the cost basis, so that's essentially what premium's
555
00:30:55.508 --> 00:30:59.388
in. And if it's a 1035 exchange, that's across
556
00:30:59.448 --> 00:31:02.568
the entire life of whichever policies.
557
00:31:03.108 --> 00:31:05.748
So it's premiums in gives you your cost basis.
558
00:31:06.148 --> 00:31:09.348
There's no tax paid for
559
00:31:10.748 --> 00:31:12.548
a settlement that's underneath
560
00:31:14.388 --> 00:31:18.328
cost basis. So if your cost basis was a million dollars and
561
00:31:18.368 --> 00:31:22.208
you got 800,000, then there'd be no tax
562
00:31:22.268 --> 00:31:25.448
paid. Anything above cost
563
00:31:25.468 --> 00:31:29.288
basis is a 20% capital gains
564
00:31:29.348 --> 00:31:30.688
tax. That's how it works.
565
00:31:31.828 --> 00:31:32.928
I will also mention
566
00:31:33.928 --> 00:31:37.488
that in cases which we've done many times,
567
00:31:38.008 --> 00:31:41.008
where there's a terminal illness, which is--
568
00:31:44.968 --> 00:31:47.608
There's a couple of different ways to prove that, then
569
00:31:49.348 --> 00:31:52.348
there is no tax obligation. And
570
00:31:53.648 --> 00:31:57.548
we just actually went through a case which it was a
571
00:31:59.708 --> 00:32:02.068
early onset dementia, and
572
00:32:02.908 --> 00:32:06.628
the person had a life expectancy of five or six
573
00:32:06.828 --> 00:32:10.608
years, but they had the early onset dementia.
574
00:32:10.648 --> 00:32:14.008
They were able to say, "Yeah, this was a terminal illness," and there was no tax
575
00:32:14.088 --> 00:32:16.528
obligation. So it's always important to get
576
00:32:17.588 --> 00:32:20.048
good advice there. We can help with that.
577
00:32:20.128 --> 00:32:20.728
But we're not
578
00:32:22.428 --> 00:32:22.888
tax
579
00:32:24.348 --> 00:32:28.248
attorneys or accountants, but we certainly can give guidance there if that helps.
580
00:32:29.328 --> 00:32:29.868
Thank you.
581
00:32:30.978 --> 00:32:32.628
I think we have another question.
582
00:32:34.528 --> 00:32:38.018
Can a healthy person in late 40s sell their term
583
00:32:38.108 --> 00:32:41.788
policy before it lapses? They have no payment issue with the
584
00:32:41.828 --> 00:32:43.888
policy.
585
00:32:44.888 --> 00:32:48.608
I would say a healthy 40-year-old with a term policy
586
00:32:48.908 --> 00:32:52.208
would not be a candidate for this type of
587
00:32:52.248 --> 00:32:52.908
transaction.
588
00:32:53.708 --> 00:32:53.808
Mm-hmm.
589
00:32:54.548 --> 00:32:57.467
At that age, you would need a significant change in health.
590
00:33:01.668 --> 00:33:01.678
Mm-hmm.
591
00:33:01.688 --> 00:33:03.628
Yeah. And a lot of times,
592
00:33:05.948 --> 00:33:08.788
correct me if I'm wrong, but if it is a term policy,
593
00:33:10.228 --> 00:33:13.848
buyers are looking for conversion
594
00:33:13.908 --> 00:33:17.428
options on these things. Because they don't want to buy a term
595
00:33:17.468 --> 00:33:21.428
policy that gets past its level term period and starts going up
596
00:33:21.508 --> 00:33:25.448
every year to a point where the premiums are unreasonable
597
00:33:25.608 --> 00:33:25.968
sometimes.
598
00:33:26.008 --> 00:33:27.988
That's right. Typically, it's
599
00:33:28.828 --> 00:33:30.518
when the policy converts to
600
00:33:31.948 --> 00:33:32.808
permanent insurance.
601
00:33:33.888 --> 00:33:37.668
Agents certainly like those conditions because they get paid on the conversion
602
00:33:37.748 --> 00:33:40.788
and also on the settlement. Now-
603
00:33:41.968 --> 00:33:43.308
Yeah. That's big
604
00:33:43.788 --> 00:33:47.468
... that is big. There are cases where
605
00:33:49.528 --> 00:33:53.728
ART
606
00:33:53.788 --> 00:33:57.248
rates come into play if someone's very ill, very sick,
607
00:33:57.508 --> 00:33:58.098
and there
608
00:33:59.628 --> 00:34:03.248
is annual renewable term premiums
609
00:34:03.328 --> 00:34:06.968
that even though they go up, the policy still works.
610
00:34:07.088 --> 00:34:09.089
So we have done that as well, but
611
00:34:10.008 --> 00:34:11.768
that's more when there's a serious
612
00:34:12.948 --> 00:34:13.589
change in health.
613
00:34:17.548 --> 00:34:20.328
All right. I think we answered all the questions that came through.
614
00:34:22.089 --> 00:34:25.089
Great questions, folks. And let me see.
615
00:34:25.748 --> 00:34:26.048
Oh.
616
00:34:26.468 --> 00:34:27.268
Just come in there?
617
00:34:27.609 --> 00:34:27.828
Yeah.
618
00:34:29.109 --> 00:34:32.768
In order to make a sound judgment and approval to sell their
619
00:34:32.808 --> 00:34:36.109
policy, is there a problem with a non-POA
620
00:34:36.629 --> 00:34:40.109
individual making a decision to sell their partner's policy?
621
00:34:40.848 --> 00:34:43.348
How can one get around selling a policy?
622
00:34:46.988 --> 00:34:47.928
Power of attorney?
623
00:34:49.388 --> 00:34:52.268
Yeah. Typically, we see that
624
00:34:53.768 --> 00:34:53.948
if
625
00:34:55.428 --> 00:34:56.048
somebody
626
00:34:58.968 --> 00:35:00.328
needs a power of attorney,
627
00:35:01.588 --> 00:35:03.568
it's typically in place.
628
00:35:07.068 --> 00:35:07.788
I suppose you
629
00:35:09.248 --> 00:35:12.868
have to look at it on a individual basis, but
630
00:35:12.928 --> 00:35:16.788
if there's a specific case
631
00:35:16.868 --> 00:35:20.778
that you want to talk about, we can investigate that more, I would say is the
632
00:35:20.868 --> 00:35:21.108
best
633
00:35:22.188 --> 00:35:22.678
rule of thumb.
634
00:35:24.228 --> 00:35:28.058
Yeah. This was a while back, but I think we had
635
00:35:28.308 --> 00:35:31.688
something like this that we had an
636
00:35:31.788 --> 00:35:35.168
elderly person with a policy, and their
637
00:35:35.828 --> 00:35:36.728
son or daughter
638
00:35:38.188 --> 00:35:42.068
had the power of attorney over it, and so they wanted to try to do something with
639
00:35:42.128 --> 00:35:42.988
it. So-
640
00:35:43.208 --> 00:35:46.588
We see that a lot. There's nothing wrong with that.
641
00:35:48.628 --> 00:35:52.008
Yeah. Absolutely. Yeah. It's a smart deal.
642
00:35:52.048 --> 00:35:55.848
But yeah, it's hard to manipulate the legal
643
00:35:55.948 --> 00:35:56.838
system when you're trying-
644
00:35:56.928 --> 00:35:57.028
Right
645
00:35:57.268 --> 00:35:58.288
... to do something quickly-
646
00:35:58.498 --> 00:35:58.498
Right
647
00:35:58.508 --> 00:36:00.218
... if you're already in a dire straits.
648
00:36:00.308 --> 00:36:01.128
Everything is
649
00:36:02.968 --> 00:36:06.588
regulated and
650
00:36:08.428 --> 00:36:12.368
so I would say that it's certainly possible, and really,
651
00:36:15.028 --> 00:36:18.688
the protections in that case is more of that the
652
00:36:18.708 --> 00:36:20.668
buyer wants to make sure there's no
653
00:36:21.928 --> 00:36:25.438
ramifications down the road. Because one of the things
654
00:36:25.648 --> 00:36:27.048
different to your
655
00:36:28.388 --> 00:36:31.748
real estate example, although that's like I would say the
656
00:36:31.808 --> 00:36:35.040
closestThe closest
657
00:36:35.080 --> 00:36:38.940
comparison is what you're asking a
658
00:36:38.980 --> 00:36:42.840
buyer to do is essentially do a transaction, pay
659
00:36:42.900 --> 00:36:46.840
today, continue to pay premiums for X
660
00:36:46.880 --> 00:36:49.820
number of years, it could be 10 years, and then
661
00:36:52.000 --> 00:36:52.800
get the
662
00:36:55.440 --> 00:36:59.420
death benefit. Whereas when you go into a house, you do the transaction, you get
663
00:36:59.520 --> 00:37:02.930
a clean title, and that transaction's done that day.
664
00:37:02.980 --> 00:37:06.800
So certainly, a buyer wants to make sure that there's no
665
00:37:06.860 --> 00:37:08.420
POA issues
666
00:37:10.360 --> 00:37:12.480
that they're going to have to run into 10 years down the road.
667
00:37:12.820 --> 00:37:14.700
Right. Yeah, exactly.
668
00:37:16.780 --> 00:37:18.760
Great stuff. Great questions, folks.
669
00:37:19.520 --> 00:37:23.420
Ryan, anything that we missed that we need to make people aware of?
670
00:37:24.320 --> 00:37:28.200
I think the main thing is if you have a case or you're thinking about
671
00:37:28.240 --> 00:37:32.200
a case or you want to know more about how to talk to your client
672
00:37:32.260 --> 00:37:34.680
about a specific situation, reach out to us.
673
00:37:34.920 --> 00:37:37.700
I always say it's better to send information in
674
00:37:39.380 --> 00:37:43.280
because each situation and case is unique, and we
675
00:37:43.340 --> 00:37:45.060
can certainly give you guidance there.
676
00:37:46.080 --> 00:37:49.980
And I think that that's a strong thing to
677
00:37:50.040 --> 00:37:53.260
leave with is that we're always here to help you be able
678
00:37:54.080 --> 00:37:54.860
to help your client.
679
00:37:56.020 --> 00:37:58.990
Yeah, that's a great point. The life settlement
680
00:37:59.420 --> 00:38:03.140
conversations usually start just like a lot of life insurance sales
681
00:38:03.180 --> 00:38:06.720
conversations, "I got a guy. Here's my
682
00:38:06.760 --> 00:38:10.600
situation." So give us a call. We would love to chat
683
00:38:10.680 --> 00:38:11.340
with you and
684
00:38:12.400 --> 00:38:16.280
find out what's going on and see if we can't find
685
00:38:16.580 --> 00:38:18.300
some options for you here. So
686
00:38:20.460 --> 00:38:22.530
conversations are free. So yeah-
687
00:38:22.670 --> 00:38:25.880
Yeah, and I will also leave with this, and Chris, you've seen it.
688
00:38:26.280 --> 00:38:30.240
It's a very rewarding thing for agents
689
00:38:30.840 --> 00:38:34.560
that have had a long trust with their client to hand them a check while they're
690
00:38:34.600 --> 00:38:36.520
living because it's always life-changing.
691
00:38:36.580 --> 00:38:40.120
I've seen people buy condos,
692
00:38:42.120 --> 00:38:46.040
really change their life with assets that they thought had no
693
00:38:46.100 --> 00:38:47.540
value. We did a deal
694
00:38:48.680 --> 00:38:52.580
even a few months ago for a policy that it was a
695
00:38:53.460 --> 00:38:54.800
UL policy that
696
00:38:55.880 --> 00:38:59.240
had been taken out and kind of structured like a term
697
00:38:59.280 --> 00:39:00.830
policy where
698
00:39:01.980 --> 00:39:05.800
the client wanted to pay for 15 years, and the 16th year,
699
00:39:06.000 --> 00:39:09.760
the premium went up like crazy and said, "What do we do?"
700
00:39:10.180 --> 00:39:12.809
We sold the policy for them, and they got, I think,
701
00:39:12.950 --> 00:39:16.780
$260,000 that they thought there was no
702
00:39:16.840 --> 00:39:19.800
value, and then they went and bought a condo in Florida.
703
00:39:19.850 --> 00:39:23.840
And that happens all the time because people don't realize that they
704
00:39:23.960 --> 00:39:27.780
have options. So it's best to talk about them and be educated here.
705
00:39:27.840 --> 00:39:31.590
Exactly right. And yeah, folks, if you're not talking to your clients about this,
706
00:39:32.560 --> 00:39:36.410
you don't want somebody else to come in behind you and scoop this
707
00:39:36.440 --> 00:39:39.920
kind of stuff up. So you definitely want-- This is an
708
00:39:40.020 --> 00:39:43.180
arrow in your quiver that you need to be aware of.
709
00:39:43.480 --> 00:39:47.370
So good stuff. Ryan, hey, thank you so much. This was great.
710
00:39:47.600 --> 00:39:50.840
Really enjoyed chatting with you and important stuff.
711
00:39:51.440 --> 00:39:55.170
Thanks, Chris, for having me. It was a pleasure, and
712
00:39:55.800 --> 00:39:59.249
we're here for anything that you ever need. You know that.
713
00:40:00.080 --> 00:40:01.560
Awesome. Thanks so much.
714
00:40:01.780 --> 00:40:02.180
Thank you.
715
00:40:02.190 --> 00:40:04.620
Thank you, everybody, for joining us. Have a great one.
716
00:40:05.040 --> 00:40:08.600
If you need anything at all, life, annuities, long-term
717
00:40:08.740 --> 00:40:10.540
care, life settlements,
718
00:40:11.640 --> 00:40:13.620
we'd love to talk to you. Have a great week.
