Tampa, FL, May 29, 2013 --(PR.com
)-- Everyday businesses miss a golden opportunity to put thousands even millions of dollars into their operating budget. Many companies overlook the value of key man life insurance policies. These valuable assets are marketable to investors on the secondary market through a life settlement. For a business a life settlement on a key man policy can be the goose that lays the golden egg.
A life settlement is thought of as only being available for seniors. In fact most people don’t even know what a life settlement is. Simply stated a life settlement is the sale of an existing life insurance policy of someone 65+, on the secondary market. A business can use their key man polices the same way.
Most people and businesses don't realize, life insurance policies are assets. Assets that are no different than a home or business, they can be bought or sold. Even a term life insurance policy is an asset. The only difference is, it has an expiration date. A convertible term policy issued on a key man is still marketable.
How can a life settlement benefit businesses? Roger Mace the owner of Mace Life Benefits says, “Using a key man (person) life insurance policy as a life settlement may provide a cash infusion into a business to solve a multitude of problems.” He cites business succession as one venue ideal for a life settlement opportunity. Every time a key person life insurance policy is in place and the key person has retired and not remaining with the company; that policy becomes unnecessary. Not taking the market value of the policy in consideration can be a very costly mistake. In one case a particular advisor made that costly mistake. The advisor underestimated a client’s key man life insurance policy because it was a term policy with no cash value. However, when the company was sold that life insurance policy was transferred as an asset. The new owners saw the value in the asset and sold it as a life settlement for several hundred thousands of dollars.
In another real case example a company was owned by a 79 year old who was the insured under a key man life insurance policy. The policy had very high premiums. The policy was transferred to his 40 year old son. Instead of continuing to pay the high premiums; the father’s policy was sold on the secondary market. A key man policy was then placed on the son at much lower premium cost. They were able to significantly reduce the companies premium cost while receiving cash for the fathers policy.
Business brokers and advisors can use life settlements to bring the sale of a business together. Consider the following case. A company owned a key person policy with several million in face value. The cash surrender value on the key man policy totaled approximately $800,000. The company advisor was able to obtain a life settlement for $3.5 million-$2.7 million greater than the cash value of $800,000. The additional amount received from the life settlement made up the difference between the asking price and what the company actually netted from the sale of the business.
There are sad stories too. A banker recently relayed a story about a senior who owned a business. The banker had no knowledge of life settlements until the senior came into his bank. The senior was trying to save his business with new financing. The senior was very upset that he just heard about life settlements and complained he had a large insurance policy he let lapse recently. A life settlement would have saved his business if he had sold his policy for cash.
The Mace Life Benefits team has over 25 years experience in the life insurance and life settlement industry. By utilizing their experience and system they bring their life settlement deals together with 20+ well capitalized institutional investors. The investors actually bid on their packages. The system is designed to achieve the highest possible market value for a key person life insurance policy. Consultation and policy evaluation require no investment or capital outlay of any kind.
Roger Mace can be contacted at roger.mace@MaceLifeBenefits.com
or (813) 991-4652 or toll free at (877) 757-1989