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All of one’s life he/she makes monthly contributions for a full life policy that financially covers one’s death on behalf of the family. The full life allows an equity build-up during one’s lifetime with insured premiums added to the insurance company’s minuscule profits and results to a cash value. That cash value is equity in the insurance value. Cash value is the value of the insurance reaches on the day the value is determined. In a television commercial, Madison Avenue strategy directed to the pensioners show two retirees, (actors), apparently a couple researching the positives (not the negatives), of selling their policy and after soul-searching, suggesting that the idea will receiving money in this fashion is a great idea. The film then depicts the retired couple anchored to their lawn chairs lovingly reaching their rapidly-approaching, heart-warming grandchildren. (Also, actors).

Naturally, do not expect the buyer offering the full cash value for this transfer. Also, remember that the insurance is betting that the client will die and you, the client will live. Not a valid bet. Once you sell your policy, the enhancement of cash value becomes the benefit to the buyer and the seller gets nothing more than buy-out price and no future interest. The policy holder can borrow from the insurance company that same cash flow at a reduced interest payment or ask your kids to pay the event that your $500K policy is sold at $250K, the policy value of $500K is paid to the buyer. Good luck on that one!

Both the insurance policy sale and reverse mortgages are “snake oil”.

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