Recapitalize Your Client Relationships

Recapitalize Your Client Relationships

Written by: Austin J. Barnes

As an advisor, you may know the challenge of working an older or new book of business: Perhaps some time has passed since you last spoke and you want to reconnect – but not sure of how to reconnect productively. 

Or, perhaps, you purchased an existing book of business from a retiring advisor and you want to connect in an interesting and meaningful way to these new clients.

Life settlements are an excellent tool that you can utilize to reengage with your senior clients.  Pick up the phone, or sit down, with them and introduce them to the potential to SELL, rather than surrender or lapse, a life insurance policy that is no longer wanted or needed or is no longer affordable. 

Statistics show that all too often – almost nine times out of 10 – policyowners will terminate their life insurance policies in their lifetime, having paid premiums for years, and perhaps decades. The reasons people drop their insurance are many, but include such things as changes in family, income or the need for the insurance.  Included among these reasons is the increased premium costs that seniors often face, in some instances by more than 100%. For retirees, it’s often impractical, if not impossible, for them to maintain a life policy while balancing all the other costs of living, thus forcing them to lapse or surrender their policies.

So, rather than wait until it’s too late, talk with your senior client about a life settlement.  This valuable alternative to a lapse or surrender has a 20+ year track record of paying seniors a market value for unwanted, unneeded and unaffordable policies in amounts that are 400-1000 percent more than the remaining cash surrender value in their policies, according to studies by the United States Government Accountability Office and the London Business School. 

The addition of resources from the sale of a soon-to-be-lapsed policy can make a significant difference in meeting or maintaining retirement goals for seniors.  The proceeds of a life settlement are often used to invest in retirement, or to retire outstanding debt, or to help meet personal financial or health care needs.

Life settlements are a safe, and secure way for your client to access this tremendous market value, as states now have established strong consumer protections for seniors.  In fact, this market is so well-regulated that over the past four years, not a single state insurance department has received a single consumer complaint against a single life settlement company.  Life settlements are a senior financial services transaction that you can feel confident in recommending to your client.

While not all policies are eligible for a life settlement, it still may make sense for your senior clients to have their policy appraised.  This is a value-added service to your client that helps them determine how to manage the policy over the next few years.  Again, this is a way to re-engage with your senior clients by offering them an appraisal for the fair value of their policy against the cash surrender value, if there is any, in the policy.

Here’s a few simple steps to start the conversation with your senior clients about finding out the market value for their policies:

Step 1: Talk with Your Client About their Life Insurance Policy.

Talk with your client about their policy.  Do they need it still?  Can they afford it?  Share the facts about the potential of increasing and unaffordable policy premiums, and discuss the importance of reviewing their life policies for this threat, as well as the potential to realize the policy’s secondary market value through a life settlement.

You will need their insurance documentation, including any statements and notices they have received. Explain that the process of appraising their policy will involve a review of their recent medical history as well as the policy itself.  There will be a need to Understand and determine their post-retirement financial needs and how their life insurance either fits or doesn’t fit into those needs.

Step 2: Review and Submit the Policy for Appraisal.

Life settlement companies like GWG provide advisors with guidelines for submitting a policy.  Does the policy meet these guidelines for policy type (Universal or Term), policy benefits ($100,000+), future premiums (increasing), cash surrender value (decreasing or non-existent).  Has the client had a change in health since the policy was issued?    If it fits the qualifications, submit the policy to a life settlement company like GWG.

Step 3: Deliver the Results to Your Client.

Many times, a policy that can pay a cash settlement can also offer the senior the ability to retain a portion of the policy’s death benefit for their beneficiaries.  This is known as a retained benefit life settlement.  Whether they choose a traditional cash settlement or to keep a portion of the policy for their loved ones, or both, they will no longer have to make premium payments, allowing them to help their client meet their retirement needs by reinvesting both the proceeds of the settlement AND the premiums that won’t have to be paid on the policy any longer.  If the policy isn’t a good candidate for a life settlement, you can also advise your client about what to do with the policy in the short and long term.  The life settlement company will work with you and your client to finalize the transaction, which in GWG’s case takes about 60-90 days on average.

In “recapitalizing” your book of business using life settlements you will be helping your clients sell an asset that either has or will soon become a liability that they can’t afford or don’t need.  You will be helping them generate significant returns for their unwanted, unneeded or unaffordable life policy.  In addition, you will likely receive compensation either from the settlement company (with GWG, it’s a fixed referral fee based on the size of the policy).or the client, AND, you will be able to help your client reinvest the proceeds, bolstering your practice in the process.

Life settlements are a service you can offer to your clients to protect them from receiving little or nothing when they face the likely lapse or surrender of their policy.   Life settlements are an opportunity for you to knock on a client’s door with good—even great!—news, while turning zero-revenue clients into immediate revenue for your practice. That’s a win-win!

Start the conversation today to recapitalize your client relationships. Contact GWG to learn which policies are ideal for a Life Settlement and our process for working with your clients.

Austin J. Barnes is Senior Director of Policy Acquisition at GWG.  Mr. Barnes started his financial services career with Northwestern Mutual, building his personal practice while developing a large team of Financial Representatives.  Mr. Barnes holds a BS in Finance from St. Cloud State University.  Mr. Barnes had held numerous licenses and professional memberships including FINRA Series 6, Series 63, MN Life and Health, IFAPAC, NAIFA, and The Life Insurance Settlement Association. Mr. Barnes joined GWG Life, LLC in November of 2013. 

GWG Holdings, Inc.
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Through an active and engaged financial professional network, GWG brings access to income and growth opportunities. GWG Holdings, Inc. (Nasdaq: GWGH) specializes in acquiring ... Click for full bio

Most Read IRIS Articles of the Week: April 17-21

Most Read IRIS Articles of the Week: April 17-21

Here’s a look at the Top 11 Most Viewed Articles of the Week on, April 17-21, 2017 

Click the headline to read the full article.  Enjoy!

1. Market Keeping You up at Night? Look for the Right Hedge

Like so many others in the industry, I was wrong. For years, I was certain that the bull market was nearing its end. I thought the market was over-extended, and that, surely, the wild equities run was coming to an end. But everyone else was bullish, and perhaps rightfully so. And while I’ve watched equities continue on their spectacular rise, I do think now is the time (really!) to put a hedge in place. Here’s why. Here’s how. — Adam Patti

2. How to Manage Bond Market Pain and Seek the Gain When Rates Are Rising

The realities for fixed income investors have changed. How is this being reflected in markets? Bond investing has become increasingly difficult over the past decade. Markets have been heavily distorted by ultra-low interest rates and quantitative easing, as well as by extreme risk aversion in response to the global economic crisis and the eurozone debt crisis. — Nick Gartside

3. Seven Reasons You'll Fail as a Financial Advisor

Is being a financial advisor worth it? I am an optimistic person and I encourage other people to keep a positive mental attitude (shout-out to Napoleon Hill and W. Clement Stone). However, by taking a good, hard look at the negatives in life, we can successfully pivot towards the positive aspects that will help us achieve our goals. — James Pollard

4. The Secret to Turning Every Prospect into a Client

How do you treat one of your most valued, existing clients? Here’s a list of some things that come to mind. — Andrew Sobel

5. Why Do Clients Change Advisors?

According to many advisors I speak with, the only clients that leave are those who have died. And while attrition may not be a big problem in this industry, I have to assume that at least a few clients change advisors without doing so via the funeral home. — Julie Littlechild

6. Why You Should Focus on Getting Referral Sources

I was talking with an advisor last week about how to get into conversations about what he does. He was relaying the story of going jogging with a friend who could be a good client but is, more importantly, connected to a large network of people who fit this advisors ideal client description. — Stephen Wershing

7. How Big Picture Thinkers Seize More Opportunities in 7 Steps

Big picture thinkers are not unicorns - rare and mystical. And they were not born with the innate ability to think big. They do, however, pay attention to the broader landscape and take the time to think, analyze and evaluate. — Jill Houtman and Danny Domenighini

8. 5 Actions to Build Your Reputation

Your reputation is who you are and how you show up, Monday to Monday®.  Many of us take our image and reputation for granted.  Give careful thought to the kind of reputation that you would be proud of Monday to Monday® and that would resonate with your purpose and priorities. — Stacey Hanke

9. How Are You Poised to Begin Welcoming GenZ to Your Workplace?

The generational changing of the guard is a fact of life as old as time. Young replaces old in responsibility, importance, control and culture. Outside of the family, the workplace is perhaps where this is seen most regularly by most people. — Shirley Engelmeier

10. Are Price Objections REALLY Price Objections?

Next time you hear your prospects give you price objections, it’s not because of the price. The give price objections because they don’t know the full value proposition that they’d be paying for. And it’s not based on their need, or your features and functions. It’s based on the buying criteria they want to meet internally. — Sofia Carter

11. Understanding the Economic Value of Transition Deals

Last week we wrote about the economic rationale behind going independent vs. moving to another major firm as an employee. As a follow-up topic, we thought it prudent to analyze transition packages attached to big firm moves and peel back the layers of the onion to show the components of these deals. — Louis Diamond

Douglas Heikkinen
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IRIS Founder and Producer of Perspective—a personal look at the industry, and notables who share what they’ve learned, regretted, won, lost and what continues to ... Click for full bio