AllFinancial Group Offers Older Consumers Access To Financing

Life insurance agents may have clients who cannot buy new life insurance on themselves due to their advanced age or health. Many agents likely have clients who feel strained by rising premiums, or who may want to free up liquidity to buy additional insurance on their spouses. Life insurance agents can assist their existing older clients by offering them a new product: access to the AllFinancial Group credit facility that provides non-recourse premium financing and cash advances secured only by the life insurance policy itself. Instead of spending months marketing new policies to new clients, agents can reach out to existing clients, close the premium financing or loan arrangement within 30-60 days, and receive high commissions. Wholesalers with orphan policies can especially benefit both their clients and themselves through this program.

Life insurance agents and wealth advisors should be aware that their older clients have increased economic difficulties due to monumental national inflation and the COVID-19 pandemic. Seniors are financially strained by both the escalated cost of living and increased lifespan averages. The American Advisors Group reported that “nearly one third of older Americans believe they will outlive their money” and “53% of seniors said the cost of living is higher in retirement than they had expected.”

Due to their heavier financial burden, many older Americans have turned to reverse mortgages. However, reverse mortgages come with a slew of downsides. Life insurance agents should reach out to their older clients to educate them about an alternative to risky reverse mortgages. Reverse mortgages come with additional costs such as origination fees and mortgage insurance up to 2.5% of a home’s appraised value. Furthermore, interest rates can increase over time and thereby increase the total size of the loan. Reverse mortgages are not tax-deductible like traditional mortgages. Most detrimentally, failure to uphold any of the loan terms, such as missing a property tax payment, triggers the requirement to pay off the mortgage early, and if that is not feasible, then that would result in a default and foreclosure.

Aside from a house, the other most valuable asset belonging to a older person is their life insurance. People often buy life insurance to protect their spouses and heirs. The overwhelming majority of life insurance policy owners are unaware that their policies should be treated as liquid assets that they can borrow against. However, borrowing from the life insurance carrier against the cash value of a policy is very limited in comparison to the total premiums paid up to date.  Another unhelpful option for policy owners is to sell their life insurance policies on the life settlement market. While better than surrendering a policy or letting it lapse due to illiquidity, selling one’s policy results in a sale price that is tempered by the number of intermediaries involved, the buyer’s drive for a high rate of return and the taxes imposed on the sale. In addition, maintaining the policy’s tax-free death benefit is more tax-efficient for beneficiaries. If someone is willing to buy your policy, then it must be more valuable than what you are selling it for!

There is now an option that allows policy owners to keep their policies for their families’ future benefit while unlocking additional liquidity for themselves and reducing or eliminating their out-of-pocket premium payments. AllFinancial Group has a unique lending arm that provides cash advances, finances annual premiums, and pays for relevant legal and accounting fees – all without outside collateral.  Life insurance policies on which the policyowner has paid several years of premiums should provide a liquidity option similar to home equity loans.  A home buyer can obtain a mortgage based on the present fair market value of the house. Similarly, AFG extends credit based on the fair market value of the life insurance policy. Agents and advisors should be aware that the AFG credit facility functions as an equity line that life insurance policy owners can access in order to maintain their policies and reduce or eliminate their out-of-pocket premium costs.

For more information, please contact Magdalena Brakoniecki at mb@allfinancialgrp.com or 561-430-5317 ext. 113. Learn more at https://www.allfinancialgrp.com/policyrescueprogram.