Unlock a Hidden Asset
Many of our clients have Key Person Life insurance or insurance policies to fund a buyout through their business. When retirement occurs or their business is sold, the need for the life insurance often no longer exists. Typically, the individual has two choices. If it is a policy with cash value, the policy is surrendered for the cash value. If it is a term policy, the policy is allowed to lapse.
However, there is a secondary market for the fair market purchase of life policies. We recently had a client in that circumstance. The need for $7,000,000 of term insurance no longer existed. Instead of allowing the policy to lapse, we solicited bids for the purchase of the insurance by an institutional investor. The offer was for $700,000!
If a few conditions are met, this can be a great way to tap into a financial asset many people do not even realize they possess. In order to sell policies in this manner, the insured needs to be in their late 60’s or older, and the policies need to have been favorably priced.
If this circumstance may apply to your situation, we urge you to contact Larry Dykes of our Wealth Management Team at 317-472-2174 to discuss further.
Wherewithal
is provided by Somerset for our clients and other interested persons
upon request. Since technical information is presented in generalized
fashion, no final conclusion on these topics should be made without
further review. For additional information on the issues, please
contact
a member of the firm. Somerset provides total financial solutions,
including accounting, assurance, information solutions, litigation &
valuation, tax, wealth management and management consulting services to
entrepreneurs and their businesses. This document is not intended or
written to be used, and cannot be used, for the purpose of avoiding tax
penalties that may be imposed on the taxpayer.
Somerset CPAs,
P.C.
3925 River Crossing Parkway, Third Floor
Indianapolis, Indiana 46240
317.472.2200 • 800.469.7206 • FAX 317.208.1200
www.somersetcpas.com
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