Every Advisor Should be Offering Life Settlements

Life settlements create opportunity, mitigate risk, and deliver value for you and your aging clients.

Every year, seniors voluntarily lapse or surrender more than $100 billion in life insurance coverage often for pennies on the dollar. Why? Because their advisors never told them there was another option: a life settlement.

For too long, life settlements have been overlooked by the financial planning community. But that’s changing. Regulations have tightened, awareness is growing, and fiduciary expectations are higher than ever. Simply put: If you’re not offering life settlements, you may be letting your clients down and missing out on one of the most powerful, win-win planning opportunities available today.

A life settlement allows a policyholder, typically age 65 or older, to sell a life insurance policy they no longer want, need, or can afford. In return, they receive a lump sum payment—often 5 to 8 times greater than the policy’s cash surrender value.

Instead of lapsing a policy or surrendering it back to the carrier for minimal value, your client receives a substantial payout, which they can use for retirement income, long-term care, healthcare expenses, or simply peace of mind.

And you? You provide real value while creating new revenue streams. That’s what we call a win-win.

A Fiduciary Responsibility You Can’t Ignore

Whether you’re an RIA, broker-dealer, insurance agent, or estate planner, you have a responsibility to act in your client’s best interests. Ignoring life settlements, or failing to even bring them up, may conflict with that duty.

According to the SEC’s Fiduciary Interpretation, “An investment adviser must, at all times, serve the best interest of its client and not subordinate its client’s interest to its own.” In states where insurers are required to inform clients about life settlements, failure to mention this option could become a liability. It’s no longer just a planning opportunity; it’s a compliance consideration.

As Brian Casey, partner at Troutman Pepper and a leading expert in insurance law, puts it: “Advisors who partner with licensed life settlement brokers can bring that level of fiduciary protection to their clients. There’s no excuse not to explore it.”

Real People. Real Impact.

Think life settlements are rare? Think again. LISA’s “Faces of Life Settlements” campaign is filled with stories of real people who transformed their financial lives with one smart move.

• David, 88, was paying $75,000 annually for a $2 million policy he no longer needed. He sold it for $792,000—instead of settling for a mere $42,000 surrender value.

• Janice, 78, needed long-term care support. Her $750,000 policy had only an $11,000 surrender value—but she received $90,000 in a life settlement.

• John and Mary, both in their 70s, were about to surrender their $500,000 survivorship policy. A quick evaluation revealed it could be sold for $85,000—money they never expected to see.

These aren’t outliers. These are your clients. Or at least, they could be.

Why Advisors Miss the Opportunity

Despite the benefits, many advisors still avoid discussing life settlements. Some remember the viatical settlements of the 1990s and fear reputational risk. Others worry about compliance or don’t understand the process.

But here’s the truth:

• Life settlements are regulated in 45 states, with strict requirements for licensing, disclosures, and escrow protection.

• Licensed life settlement brokers are fiduciaries by statute, legally obligated to act in the best interest of the policyholder.

• Licensed life settlement providers evaluate submissions, at no cost and utilize state approved consumer-oriented agreements to purchase policies

• Advisors may earn commissions or referral fees—and often find new planning opportunities from reinvested proceeds.

As LISA’s Executive Director Bryan Nicholson notes, “We don’t say every policy should be sold. But every policy should be evaluated. The risk is not in offering life settlements. It’s in ignoring them.”

When to Consider a Life Settlement

Life insurance is an asset, just like real estate or a stock portfolio. And like any asset, it should be reviewed regularly, especially when circumstances change. Your client may be a candidate for a life settlement if:

• Their premium costs are rising and becoming unaffordable

• Their needs have changed (e.g., death of a spouse, business sold, no more dependents)

• They’re considering lapsing or surrendering a policy

• They simply no longer need the coverage

In other words, life settlements are a strategic exit for policies that have outlived their original purpose and a smart way to unlock hidden value.

Advisors Win, Too

Life settlements don’t just benefit your clients. They benefit you, too:

• Client loyalty increases when you uncover unexpected value

• Revenue potential grows from new business, commissions, referrals, and follow-up planning

• Reputation strengthens when you’re seen as a knowledgeable, trusted advisor

In many cases, clients use settlement proceeds to fund new life insurance, annuities, or investment products putting money back in motion, and back under your guidance.

It’s Not a Gimmick—It’s a Legitimate Financial Tool

As LISA emphasizes, life settlements are not a one-size-fits-all solution. But they are a vital option that every advisor should understand and offer when appropriate.

“There are 38 million life insurance policies owned by Americans over 65, with over $3 trillion in face value,” said Nicholson. “Even if a small fraction of those are eligible for a life settlement, the impact is enormous.”

Too many clients lapse policies simply because they didn’t know better. As their advisor, you can change that.

Get the Tools and Support You Need

If you’re not sure where to begin, you’re not alone. That’s why LISA exists. We’re the oldest and largest association in the industry, advocating for policyholders and educating financial professionals like you.

The process is simple:

1. Identify policies that may no longer be needed or wanted

2. Request a free, no-obligation policy appraisal from a licensed broker or provider at
www.lisamembers.org.

3. Help your client evaluate their options and decide what’s best

That’s it. No strings attached. Just an informed decision and the potential for real impact. Learn more about the Life Settlement process here.

Your Clients Deserve Better. So Do You.

You wouldn’t ignore an underperforming stock or a vacant property. Don’t ignore a life insurance policy that no longer fits your client’s needs.

Life settlements are not just about unlocking money. They’re about doing what’s right. They represent a modern standard of care for modern financial professionals.

It’s time to rethink what you’re offering your clients. It’s time to include life settlements in the conversation.

You can read the full Life Settlements Guide here. When you're ready to get started, simply visit www.lisamembers.org for a free, no-obligation policy appraisal from a licensed broker.