EDITOR'S PEN

Caregiver Thought Leader Interview
Danny Swick
Director of Marketing, Montage Financial Group 

Gary Barg: One of the major challenges that caregivers face is access to sufficient financial resources. Yet, so often, they already have the means to care for their loved ones, but just don’t know how to access these funds. For example, if they have a life insurance policy, they can access funds through a life settlement. Can you explain what a life settlement is?

Danny Swick: Simply said, a life settlement is the sale of a life insurance policy to a third party for a value that exceeds the policy’s cash surrender value, but less than the face value.

Gary Barg: What are some of the reasons that people choose to sell their life insurance policies?

Danny Swick: This is a great tool for somebody who happens to have a life insurance policy and they get to a point where they realize they no longer need it. Once they understand that it is a transferable asset, and there is value in it, then they may have the ability to sell it. It becomes a win/win situation. They can get the surrendered cash value from the life insurance company, or possibly sell it to a third party, which is called a life settlement. This amount would be greater than the cash value. They would end up with a lump sum payment and can use that money for whatever they wish.

Gary Barg: If I sell my policy, who decides how much cash I get? How does that work?

Danny Swick: That’s a great question. When you want to sell your policy, we will first do underwriting, where we’ll gather your medical records. We’ll then go to a third party actuarial firm to review the medical records. It’s basically a formula where we look at what the life insurance death benefit is, what the premium payments are and what we feel the expected life expectancy is. Then, based on that, we’ll come up with a dollar amount and that’s what we would offer a policy owner.

Gary Barg: How have you and Montage Financial Group helped caregivers and their loved ones with life and senior settlements?

Danny Swick: A life insurance policy is technically an asset and it’s a transferable asset, just like jewelry, where you’re able to sell it. We have individuals who simply no longer needed the insurance and if they just let the insurance go, they wouldn't get anything. With a life settlement, if they get $50,000 or $100,000, that is money they can use to improve their quality of life.

Gary Barg: One thing I have heard is that when I sell my policy, I don’t have to pay the premiums anymore. Is that true?

Danny Swick: Exactly. If you sold your policy, what would happen is the new owner of the policy would be responsible for making those premium payments. And then they’re the ones that would also collect the death benefit. For the individual selling the policy, they’re going to get a cash payment.

Gary Barg: What are some of the myths and misunderstandings that people have about life settlements?

Danny Swick: Most people don’t realize that this option exists. It is fairly popular and what would make somebody more comfortable is there are actually a significant amount of regulations associated with life settlements. Different states have various requirements and we are a licensed provider in the majority of the states.

Gary Barg: A policy holder can contact you and say that here’s my situation, what offer can you make? And they can take it or they don’t take it.

Danny Swick: Absolutely and we’ll walk them through it. We’ll explain it in detail. We really provide more of a consulting role to explain what their options are and what to look out for. Hopefully, we can give them something that makes sense so that they’re comfortable and able to receive proceeds that are more than the cash surrender value of their policy.

Gary Barg: Speaking of the proceeds, if I go ahead and enter into a life settlement contract, when do I get my money and who pays?

Danny Swick: When we go through the transaction, there are documentation that you and your beneficiary would sign. It’s really so that everybody that’s associated with the policy is aware of the transaction. And once all those documents are signed, the purchase price is put into an escrow account. Then once the ownership of the policy is transferred to the new owner, those proceeds are sent to the policy owner.

Gary Barg: Thank you, Danny. This is very important information, because as family caregivers, we may actually be sitting on an asset that, unless we know how to get the cash value out of it, we’re suffering financially, when we didn’t need to.