Increase Expected in COLI Life Settlements

Asset Life Settlements, LLC issued a statement saying that, as business owners seek to cash out and retire, an increasing number of corporate owned life insurance (COLI) policies will be brokered in the secondary market. “The improving economy and financial performance of small businesses is the driving force behind the recent spike in the sale of small businesses by aging owners,” said Scott Thomas, co-founder of the company. Economists estimate that 70% of the 12 million privately owned businesses in the U.S. will change hands as Baby Boomers retire in the next decade. Some of those retiring business owners who carry key person life insurance may qualify for a life settlement to boost their retirement nest egg. Company co-founder Jeff Hallman says that discussions with agents and recent market studies support the company’s optimistic outlook. According to BizBuySell.com, small business sales in 2013 were up by 42% from the previous year. Sixty-five percent of the businesses sold in the first quarter for 2014 were by Baby Boomers. Also, 67% of business owners expect to retire in the next 10 years, according to a Pepperdine study. Hallman expects the recent upturn in mergers and acquisitions and the projected sale of businesses to present new opportunities for insurance advisors when it comes to the disposition of corporate owned life insurance. “It makes sense that aging business owners who survived the recent economic downturn are motivated to cash out now. Insurance advisors should remind retiring business owners and business brokers not to overlook the possible hidden asset value of key person life insurance,” he said.

Last Updated 10/21/2020

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