New factors have sparked among the life settlement market regarding investors and consumers alike showing rising interest.
Reaching the age of 71, are the oldest of Baby Boomers, which brings them to or near retirement and closer to the sweet spot age for life settlements. As this age group begins and continues to retire, the need to cash from a life settlement can become an important retirement income supplement.
As premiums rise, another form of cash flow relief can come from eliminating these premiums necessary to keep policies in force. This is especially true for policies that have endured prolonged low interest rates that are now requiring substantially greater premiums than projected at purchase.
While baby boomers continue to age, another factor of importance is the money required for both long-term care and health care. Life settlements can be a source of funds to pay for these often unexpected expenses.
With the increased estate tax exemption ($5,490,000 per person or $10,980,000 per couple with portability in 2017), only about 1/10 of 1 percent of Americans will be subject to federal estate taxes under the current law. This means that thousands of policies that were brought to offset estate taxes are no longer needed. So, even those liable for estate taxes will have reduced tax bills. Therefore, the likelihood of no federal estate tax looms large under the new administration.
While consumers have greater interest or need for life settlements, investors are showing an increasing appetite for life settlements, too.
As the economy is on the rebound, more capital is available for investment, but low interest rates have investors searching for alternatives without additional exposure to the stock market, which is already at record highs. Life settlements are primarily a morality play meaning they are an investment option that is not directly correlated to the stock market or interest rates.
Investors are also gaining more confidence in life expectancy evaluations now with more historical experience available which is the critical pricing tool for life settlement investors’ buying decisions.
For many policy-owners, education is the key to making decisions that will maximize their assets and provide for their financial goals. To learn more about life settlements and how to offer this valuable option to your clients, visit genesislifesettlements.com or email us directly to talk one-on-one with a Genesis advisor.