With life settlements starting at age 65, the typical investor can wait nearly two decades for a payout. By using more rigid underwriting standards, Pacific West Capital Group (PWCG) shaves at least 10 years off that wait. Pacific West Capital considers only policies with an insured 75 or older and, furthermore, that person must suffer from chronic or degenerative health conditions. In an interview with Fox News Radio, PWCG president Andrew Calhoun said that his clients’ policies often reach maturity within four to seven years. Some investors have doubled their money within as little as 17 months.
Understanding the life settlement process is an important part of judging whether this is the right investment for you. Asset generation is a key element to a successful investment, and in the case of life settlements the assets are the life insurance policies. In this article Pacific West Capital Group reviews the primary reasons seniors are willing to part with valuable life insurance policies.
- Major Expenses – Unexpected expenses can leave the policyholder with a sudden need to raise cash. For this population that generally means medical expenses, but it could also include home damage not covered by insurance, or expenses incurred by children and grandchildren.
- No Need For Coverage – The mortgage is paid off. The insured can’t drive so doesn’t have car expenses. The pension’s survivor benefit will take care of the spouse. The policyholder may suddenly realize that survivors won’t suffer a great financial loss after the insured’s death, so life insurance simply isn’t necessary anymore. The insured might as well cash in the policy and get some use out of the money now.
- Unable To Pay Premiums – Most retirees have seen valuable retirement assets eroded by the recent bad economy. Others may have lived longer than they had expected, and are seeing their funds dwindle. They have to cut expenses to make ends meet, but those hefty insurance premiums are too much of a burden.
- Changing Insurance Needs – Universal life has advantages over term life policies, but older policyholders may not need those benefits anymore. Although the insured can take the surrender value and convert to a term policy, the policyholder can receive a lot more money from taking a life settlement instead. Assuming the person is able to take a second policy, a life settlement is likely to be the better option.
- Divorce – Older policyholders have grown children who have jobs and are able to support themselves. This means the policy exists in most cases to support the spouse. However if the policyholder gets a divorce, then it makes more sense to take a life settlement now than to maintain a policy that is no longer needed.
- Loss Of Dependents – The deaths of spouse or children can leave a person with no beneficiaries. With nobody to leave the money to, the policyholder can sell off the life insurance policy and take advantage of the cash now. The money generated allows the insured to live at a much higher standard of living than before.
There are the most common reasons Pacific West Capital Group has heard for discarding life insurance. Pacific West Capital Group reviews over $500 million worth of life insurance policies every month, examining not just the policy but the policyholder as well, to find the most reliable and stable investments for our clients.