When a client experiences a meaningful change in health, there are understandably a lot of conversations that follow.
Financial plans may need to be revisited. Retirement income needs can change. Long-term care becomes a more immediate consideration. Families begin thinking differently about liquidity, expenses and what the next several years may look like.
Life insurance should be part of that conversation as well, but perhaps in a way that many advisors and their clients have never considered.
A policy that was purchased years or even decades ago was designed around the client’s circumstances at that time. Their age, health, financial goals and family needs all played a role in the decision to purchase the coverage. As those circumstances change, the role of the policy may change too.
What is less obvious is that the potential market value of the policy may have changed along with them.
Why a Change in Health Can Matter
One of the fundamental factors institutional buyers consider when evaluating a life insurance policy is the insured’s life expectancy. As a result, a meaningful change in health can affect how buyers evaluate a policy and potentially what they are willing to pay for it.
That creates an opportunity advisors should be aware of.
A policy that may not have been a strong candidate for a life settlement several years ago could potentially look very different today. The face value hasn’t changed. The carrier may be the same. The premiums may be similar. But the circumstances surrounding the insured have changed, and that can materially affect how the secondary market views the policy.
This is particularly important because clients and even their advisors may continue thinking about the policy based on what they knew about it in the past.
Perhaps the client explored a life settlement several years ago and there wasn’t enough value to make it worthwhile. Maybe the policy was reviewed when the client was healthier and the recommendation was to continue holding it. Or perhaps a life settlement was never considered because there was no obvious reason to explore one.
A significant change in health can be a reason to take another look.
The Policy Review Should Be Part of the Broader Conversation
Good advisors already understand that a major life or health event can change a client’s financial priorities.
The question is whether the life insurance policy is being reconsidered along with everything else.
If a client’s health has declined and their financial needs have changed, they may begin looking for additional liquidity. They may question whether continuing to pay premiums still makes sense. Their estate planning objectives may have evolved. They may even begin considering surrendering a policy that no longer feels as important as it once did.
Those are exactly the moments when understanding the policy’s potential value becomes important.
The problem is that most policy owners only know one readily available number: the cash surrender value.
If the client no longer wants or needs the coverage, surrendering the policy can therefore feel like the natural next step. But the surrender value tells you what the insurance carrier is contractually willing to provide. It doesn’t necessarily tell you what an institutional buyer may be willing to pay for the policy.
When health circumstances have changed, that difference can become particularly meaningful.
A Policy Is an Asset. Its Value Isn’t Necessarily Static.
We often encourage advisors to think about life insurance as an asset rather than simply an insurance product.
That distinction matters.
When circumstances surrounding an asset change, you reevaluate it. You don’t automatically assume that yesterday’s valuation or strategy still applies today.
Life insurance deserves the same consideration.
A health change doesn’t automatically mean a policy will qualify for a life settlement, nor does it guarantee that an attractive offer will exist. Policy structure, premiums, face amount, age and numerous other factors all play a role.
But it can be an important signal that the policy deserves another look.
At SFS Life Settlements, we believe that’s where opportunity recognition becomes incredibly valuable for advisors. You don’t need to determine what the policy is worth yourself. You don’t need to know which buyers may be interested or how a particular medical change affects their underwriting.
You simply need to recognize that something has changed.
Then you can ask the question.
Could this policy be worth more today than it was before?
Knowing When to Revisit the Conversation
For advisors, this isn’t about turning every health event into a life settlement discussion. It’s about understanding the situations in which another option may exist for your client.
If a client experiences a meaningful decline in health while also questioning the need for their coverage, struggling with premiums, considering surrendering a policy or looking for additional liquidity, there may be value in reviewing the policy before making an irreversible decision.
Even a policy that has been evaluated previously may deserve another look if the client’s circumstances have changed significantly.
The secondary market isn’t static. Neither are your clients.
A policy that didn’t make sense for a life settlement before may make sense today.
This Is Where SFS Can Help
At SFS Life Settlements, we work with advisors and insurance professionals to help identify and evaluate these opportunities.
Our role isn’t to tell you that every policy should be sold. It’s to help you understand what’s possible so you and your client can make a more informed decision.
When a policy appears to be a candidate, we bring it to a broad marketplace of institutional buyers and create competition for the asset. Different buyers can evaluate the same policy differently, which is why we believe exposing a policy to the market is so important when the goal is maximizing value for the policy owner.
Sometimes the answer is that keeping the policy remains the best decision. Sometimes there isn’t enough secondary-market value to justify a sale.
And sometimes circumstances have changed enough that an asset your client may have overlooked has become a meaningful source of liquidity.
The important thing is knowing to look.
Because when your client’s health changes, their financial plan may need to change with it. And before decisions are made about an existing life insurance policy, it’s worth understanding whether the value of that policy has changed too.
If you have a client whose health or care needs have changed and they own a life insurance policy they may no longer need, contact SFS Life Settlements. We’re always happy to take a look, help you understand what may be possible and make sure your client has the information they need before making a decision about their policy.