September is life insurance awareness month and serves as a good reminder that life insurance is an asset and, just like most any other investment, requires ongoing monitoring. A periodic review can help ensure that the policy still fits your needs and is performing as expected.
People purchase life insurance for any number of reasons, some of which may change over time. One common reason to purchase life insurance is to provide loved ones with a source of funds that can be used to replace the income of the family’s breadwinner(s) if they die prematurely. While family protection is the foundation of good financial planning, life insurance can be a surprisingly versatile tool and may be used to serve a variety of purposes.
- To provide instant liquidity so that assets do not need to be liquidated immediately.
- To fund a buy-sell agreement or key-person insurance for a business.
- To provide for a charitable bequest.
- To provide funding for a special needs trust.
- To fund educational costs.
- To satisfy a lender’s requirement for collateral for a loan.
- To ensure that a large debt (e.g., a mortgage) is repaid.
- To fund estate taxes, the amount of which might have increased or decreased markedly since the policy was purchased.
Whether you purchased a policy to satisfy one of the needs described above, or for entirely different reasons, life and circumstances have a way of changing over time. People may find that they no longer need, or perhaps can no longer afford, policies that were taken out several years ago.
If this describes your situation, and before you allow a term life policy to lapse (or redeem a permanent policy for its cash surrender value), we recommend that you consider whether it might be more beneficial to sell the policy. Known as a life settlement, selling a policy can sometimes net the policy owner a sum that is far in excess of the policy’s cash surrender value or a term policy’s unearned premium.
If you have a policy that you no longer need, we’d welcome the opportunity to speak with you about whether a settlement option or sale is best.
Please call us if you’d like to discuss.
The Gassman Financial Group
9 East 40th Street, 5th Floor
New York, NY 10016
T| (212) 221-7067
F| (585) 625-0830