According to some of the latest research conducted by the Life Insurance Settlement Association (LISA), roughly $112 billion in death benefits is forfeited each year by individuals 65 years of age and older who surrender their life insurance policies or allow them to lapse.
The results of the research were revealed during LISA’s Fifth Annual Institutional Investor Life Settlement Conference. John Welcom, founder and CEO of Welcom Funds, and Darwin Bayston, president and CEO of LISA, presented the data. As part of their presentation, Welcom spoke about the potential for growth within the life settlement industry.
“Based on the publicly available data regarding the number of closed life settlement transactions last year, we’re currently serving less than 1% of this total possible market, so there is tremendous potential growth in the years ahead,” said Welcom.
According to LISA’s analysis, over 99% of the “total possible market”, has yet to be penetrated. A survey conducted by the Insurance Studies Institute, discovered that a large percentage of individuals over the age of 65 who have surrendered or lapsed their life insurance policy, did so without knowledge of the life settlement option. In fact, 90% of those seniors stated that they would have contemplated selling their life insurance policy, as opposed to having it lapse or surrendered, had they known that it was an option. This is encouraging news for life settlement brokers and companies, as this indicates a vast untapped market.
This proves just how important it is to educate both life insurance agents, as well as consumers. Life insurance agents are usually the first point of contact that policy holders have when they are considering getting rid of a life insurance policy. Often times individuals in this situation are looking to rid themselves of the financial burden of premiums that have become unaffordable, however other reasons exist as well. The problem is that most life insurance agents have little to no knowledge of the life settlement process. Reaching out to this group of professionals to educate them on the benefits of life settlements, is key in ensuring the growth of the life settlement industry.
In addition to no longer having to pay premiums, in most cases selling a life insurance policy also results in the initial policy holder being awarded a lump sum of cash that is typically larger than the cash surrender value insurance companies offer. This is often the most appealing feature of a life settlement. A lump sum of cash can make it possible for seniors to add to their retirement fund, supplement their income, get out of debt, or even take their dream vacation.
One of the most important points to take away from the research can be summed up by the following statement by Bayston: “Our greatest challenge as an industry at this time is to facilitate greater consumer awareness of life settlements so that seniors at least know this option exists and that it may be an attractive alternative to lapsing or surrendering a life insurance policy.”
Generating consumer awareness can be done in a number of ways including informative articles, detailed statistics, real testimonials, and knowledgeable insurance agents. It is important for life insurance brokers to utilize all of the resources listed above in order to educate potential customers and ultimately reach a much greater portion of the market.
Since its beginning Genesis has become one of the premier life settlement brokerage firms within the industry. Our dedication to our customers, and our mission to procure the best possible offer set us apart from our competition. For more information on the Genesis “experience”, click here or call us today at (877) 303-9777.