Ask the expert: is a $150,000 face amount too small?

The question was: I have a client who is age 66. He has decided to stop paying premiums on his $150,000 term policy. Could he possibly sell it in the secondary market or is the face amount too small?

The answer is: There is a market for smaller policies. Some life settlement providers like Coventry First have the ability to purchase policies with a minimum face amount of $100,000. Coventry First's policy valuation process is expedited through a Simplified Settlement questionnaire, which the insured and owner sign verifying policy information and medical history.

For these smaller policies, valuations can be performed quickly upon receipt of the application. Typically, your client's term policy would have to be convertible, which means you as the advisor could be the writing agent on the converted policy. A win-win for both you and your client.