New LifeStyles - Fort Worth

Winter/Spring 2014

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Helping Seniors Meet Changing Needs By Ron C. Peck, MBA and Mark Leeds All too often when one reaches a certain period in their lives life insurance may no longer be needed. In fact, all too many seniors let their policies lapse or surrender them back to the insurance companies. Why? Premiums have become too expensive or the policy is no longer needed or wanted. Before letting those policies lapse or surrendering them to the insurance company, consider a Life Settlement. A Life Settlement is a lump sum cash settlement paid to the policy holder in exchange for the policy ownership rights. This can be a valuable tool for seniors with changing needs. Lapsing or surrendering a policy is most likely a difficult decision for seniors who have paid premiums for many years. The policy was likely purchased years ago when premiums were lower and now the senior has a limited or fixed income and might be struggling to make the new premium payments. There might be a decline in a senior's health and a Life Settlement might be an appropriate way to fund long term care. Advisors or Estate Planners may come across other situations where the original purpose of the insurance is no longer needed. If this happens, the senior might consider selling the policy and use the proceeds while still living. The possibilities could include charitable giving, traveling, donations, pay off debt, medical expenses, creating a college fund for a grandchild or purchasing a more appropriate policy with lower premiums. Transferring ownership by donating the policy to a nonprofit organization creates a positive tax event of the "fair-market-value" of the policy. Your advisor or estate planner has a fiduciary responsibility of informing seniors about this option but might know little about Life Settlements in helping meet changing needs of their senior clients. The whole process starts with an appraisal of the policy to determine its fair-market-value. If a Life Settlement looks like a good fit, the advisor or estate planner should work with an experienced broker to get the best possible offer for the senior's policy. To see examples of recent transactions with seniors who wanted to sell their unwanted, unneeded or under performing life insurance policies visit Ron C. Peck, MBA is a Principal for FWLife in Redmond, WA. You may reach Ron at 425-444-8256 or 35

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