Travis Rickman's blog

The media has offered conflicting views about life settlements—some stories say they are a great option for seniors but others say settlements are shady deals. To cut through the confusion, life settlement clients might do well to refer to those famous words of Mark Twain, who said, The reports of my death are greatly exaggerated.” Seniors could use the same sentiment to describe the life settlements market. Here are the most common myths about the market, along with the facts.

People often ask us what happens to a life insurance policy after it has been sold through a life settlement transaction, or, what happens before and after a cash settlement is distributed after ownership of the policy is transferred to the financial institution that purchased the policy? As a policy holder or an advisor, you might be interested in some of the things that happen while a life settlement buyer (known as a provider) purchases your policy and assembles a portfolio.

To some, the business of selling one’s life insurance policy for a profit is a concept which has become the bane of the financial community at large and serves only to defraud the elderly and enrich the bad actors. However, for seasoned and knowledgeable financial advisors, knowing when and where to apply a life settlement can dramatically improve the finances of a family.

Like all financial markets, the life settlements industry is going through a post-recessionary correction. Settlement offers, which were lucrative prior to the recession, are starting to return to more realistic levels. Even though capital has started to come back into the space, many industry professionals still feel that there is much work to be done.

http://www.cnbc.com/id/38229197

A third of middle-income workers will likely run out of money after 20 years of retirement and significantly more lower-income workers will deplete their savings after 10 years, according to a new study released Tuesday.

The Employee Benefit Research Institute, a nonpartisan research group based in Washington, said its retirement readiness study found that living longer, saving too little and inadequate planning for health care costs will leave many retirees short of money to pay basic living expenses.

Every advisor is familiar with the term “fiduciary”. A fiduciary is “one that stands in a special relation of trust, confidence or responsibility in certain obligations to others”. Fiduciary comes from the Latin root fiducia meaning trust. CPAs, attorneys, financial advisors and insurance agents are fiduciaries to their clients. With that position of trust comes a responsibility and an obligation to advise clients on matters that may affect their financial or economic well-being.

The question was: According to a Carlson School of Management study, only 10% of seniors rely on a financial advisor for financial advice. So, how can I as an advisor reach more senior clients and convey the life settlements option available to them?

The answer is: Here are three suggestions:

Trust-owned life insurance, when properly designed to meet trust objectives and risk suitability parameters of the grantor/insured, carries the benefit of excluding the proceeds from the taxable estate of the insured. Like any other asset however, the life insurance trust is not self-managing and requires periodic review and evaluation to minimize the risk of loss to the beneficiaries and subsequent litigation risk to the trustee.