Application of Business Owned Life Insurance Policies in the Life Settlement Market

The robust secondary market for life insurance, otherwise known as Life Settlements, has evolved into a multibillion dollar industry that is playing a key factor in a new perspective on financial and estate planning. When considering a possible candidate for a life settlement, what immediately comes to mind are individual or trust owned policies. However, there is another category of the life settlement market that is largely overlooked and that is business owned life insurance.

Businesses take out life insurance policies for a multitude of reasons. It may be to cover a potential monetary loss on the sudden death, disability or retirement of an executive, to help a partner buy out the other partner through buy-sell insurance, or it may even be used to collateralize a loan taken out by the company itself. Whatever the case may be, a life insurance policy that is no longer needed by a company, whether large or small, could be a very valuable asset and if settled in the secondary market can produce significant capital.

A Life Settlement can offer monetary value that is right within arm’s reach. For a business, or even a retiring executive, it can offer substantial liquidity for almost anything, including helping the company move forward with an influx of cash as well as helping the executive fund his own retirement.

Whether it is a Term, UL or Whole Life policy, it is an asset that should never be overlooked. If your client or your client’s company owns an insurance policy that is no longer needed, wanted or affordable, do not let it lapse or be surrendered and if it’s a term policy, don’t let that conversion period expire!