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There are new products, riders and markets that have revolutionized the industry…

Bad Information?

There has been much written by “talking heads” about life insurance in the past. Much of the negative information is biased and misleading, and is intended to appeal to the bias of their readers and sell more papers and magazines. These “talking heads” know as much about life insurance as I know about string theory.

What these “talking heads” do not tell you is that institutional investors all over the world are buying U. S. life insurance policies as an alternative to bonds…and they are getting returns of well over 10% in most cases, as opposed to just a few percent in the bond market. This life insurance investment market is called the Life Settlement Market.

Life Settlement Market

Life insurance issued by U. S. life insurance companies can provide the policy owner significant internal rates of return with negligible risk. When institutional investors around the world realized the remarkable rates of return available with U.S. life insurance, they began buying them by the thousands and putting them in investment funds that will generate well in excess of 10% with almost no risk. In fact, the only real risk is that the insureds never die.

The point is that if life insurance can provide a double digit rate of return to an investor, it can provide the same return to you.

Example…the largest life settlement case I handled was several years ago for a 70 year old male client who had two$1,000,000 policies that he did not want to continue. One was a convertible term policy with zero cash value and the other was a permanent policy with $26,000 of cash surrender value. We shopped them in the Life Settlement Market. A few weeks later I delivered my client checks totaling $289,000. (I will be happy to give you his name and contact information.)

Term Insurance Market

Traditional term comes in several different flavors…10, 15, 20, 25 and 30 year term…but there are also certain companies that issue for odd number of years (i.e. 15 through 20-year). And then there is the “Term for Life” products that provide guaranteed premiums and death benefit to whatever age you specify, including for LIFE. I call this product “TERM FOR LIFE”, but it is actually Universal Life with (a) guaranteed premiums, (b) guaranteed death benefits and (c) zero cash value…exactly like “term” insurance.

An important considerations when buying term insurance is the conversion privileges (which can make a big difference later if the insured becomes uninsurable or if the policy owner wants to sell the policy in the Life Settlement Market).

We quote only companies with the top four ratings from A. M. Best and Co., but this does not prevent us being able to offer the lowest rates because the best companies have the lowest rates.

OPTIONAL BENEFITS NOW AVAILABLE WITH TERM INSURANCE!

Recently, companies have begun adding “Long Term Care” (LTC) riders to term and lifetime policies. The generic name for these riders is “Living Benefits Rider” includes coverage for LTC that is essentially identical to expensive, stand alone LTC policies that cost many thousands in premium each year. The rider that provides LTC benefits is typically called “Chronic Illness Rider” by the insurance companies. These riders provide LTC benefits to the insured policy owner during his/her lifetime, and while the policy is in force, in a manner that is essentially identical to the stand alone LTC policies. 
If LTC benefits are paid, the death benefit of the policy is reduced by the amount of the benefits paid. However, since this results in the death benefit being paid early and well ahead of the life expectancy of the insured, an adjustment is made in the death benefit reduction based on an assumed interest rate. It is sort of treated like a loan against the eventual death benefit with interest on the loan.
Here is the real “sizzle” to these LTC riders…they are either included free (no additional premium!) or have a very modest premium (and a small fraction of what the premiums are for a stand alone LTC policy!
IF YOU HAVE NOT ACQUIRED LTC COVERAGE BECAUSE OF THE HIGH COST OF STAND ALONE COVERAGE, NOW YOU CAN PROVIDE THAT SAME COVERAGE AS PART OF A LIFE INSURANCE POLICY with little or no incremental outlay.