Information for Accountants
Life Insurance and Life Settlement Information for Accountants
The growing life settlement marketplace is a new frontier for CPAs who serve both affluent seniors as well as corporate clients. In addition, many CPAs serve as advisors to charitable organizations that accept donated life insurance policies. Thus, it is important that CPAs have an understanding of the product and its applications in each of these situations.
Life Settlements for High and Low Net Worth Seniors
As financial gatekeepers who are often faced with wealth management issues for high net worth seniors, CPAs are in a position to recommend the financial empowerment provided by a Life Settlement.
If you are currently working with senior clients, or children who have often taken the responsibility for an aging client, who purchased policies issued two years ago or more, chances are you can save your clients sums by using the proceeds of a Life Settlement on the original policy to purchase a new policy with similar coverage – and in some cases zero out the annual premiums entirely, or minimally identify a better performing product that may better suit the needs of the client.
It is important that CPAs understand the value that a Life Settlement can provide in terms of assisting their senior clients with estate planning decisions that enhance the senior’s financial portfolio. You might be asking how a Life Settlement can provide financial empowerment?
In addition to providing an exit strategy from a more expensive policy, Life Settlements can also provide the solution to other financial planning objectives.
Financial Planning Solutions Include:
- Providing liquidity for other investments
- Freeing up cash
- Facilitating charitable giving
- Enabling cash gifts to family members
- To finance long term care
Business Applications for Life Settlements
Integrity has had a long successful history in assisting small companies, as well as public companies sift thru proper planning and evaluation methods for clients. In addition to assisting senior clients with Life Settlements, CPAs will want to be aware of the business applications for Life Settlements. With the changes that occur thru mergers and acquisitions, the retirement of key executive, and the changing structure of a buy-sell arrangements, the growth in life settlements continues to grow year over year as outside CPA’s and attorneys begin to look at the picture in its entirety and also review the valuation of an existing policy in the process. In the case of a buyer considering the purchase of another company, part of the due diligence process should involve an evaluation of "key man" life insurance policies on departing executives.
It is often the case that such "key man" policies are permitted to lapse because the M&A attorneys or CPAs were not aware of their existence - let alone the fact that they could qualify for a Life Settlement. Furthermore, life settlements can often be used to enhance severance or retiree packages.
