Matt Feret (00:02)

Hey everybody, before we start today's conversation, I want to take a minute just to set some context because this is one of those topics where people often have a reaction before they have information. When you hear phrases like selling a life insurance policy, it can feel uncomfortable. Some people associate it with late night commercials or aggressive financial tactics or the idea that someone might be taking advantage of a vulnerable situation. That reaction is understandable.

 

And it's exactly why conversations like this one matter. Because what most people don't realize is that life settlements are not a loophole or a gimmick. They've existed in US law for decades and are regulated primarily at the state level with licensing requirements, disclosure rules and consumer protections overseen by state insurance departments. Like many financial tools, this space has had bad actors in the past. I don't think you can pick any part of money and people

 

and you're not going to find a bad actor in there. And a lot of times, unfortunately, those moments shape public perception. But regulation, transparency and professional standards have changed dramatically over time, largely because industry leaders have pushed for stronger oversight rather than less oversight. So today's conversation is not a sales pitch. It's an educational discussion about options, options that already exist, all legal.

 

and that some families may want to understand long before they're ever needed. You may never use this option. Most people won't. But understanding it calmly, clearly, and without pressure is how you make better decisions and avoid being boxed into choices you didn't even know were on the table. And that's why we're talking about it today. My guest today works in a part of the insurance and retirement world that most people never hear about unless...

 

they're already under stress or facing a major financial decision. He spent more than three decades in the life settlement industry where policy owners may have the legal option to sell a life insurance policy they no longer need or want or can afford, often for more than the cash surrender value, but less than the death benefit. Over his career, he's been directly involved in negotiating and settling thousands of policies.

 

He's also played a significant role in shaping industry standards, regulation, and consumer protections, including serving as chairman of the board of the Life Insurance Settlement Association. He is often referred to as Mr. Life Settlements, not because he promotes this option indiscriminately, but because he's been deeply involved in defining what it does and what it does not, and when it does and does not make sense.

 

My guest today is Rob Haney. Rob, welcome to the Matt Feret Show.

 

Rob Haynie (02:58)

Great to be here, Matt. Thank you for that great introduction. Those kind words.

 

Matt Feret (03:02)

Well, for people meeting you the first time, tell everybody what you do, how long you've been doing it, and how you found your way into the life settlement world.

 

Rob Haynie (03:11)

So good story. 1993, August of, I'm at the gym, which reminds me I need to go again. And a gentleman that I knew was pretty good in sales come over to me and he started to pitch this idea that he was helping people sell their life insurance policies that were dying of AIDS. And of course my initial reaction was, that's the most foolish thing I've ever heard of my life. So I was.

 

Matt Feret (03:36)

Right, I just went, ooh.

 

Rob Haynie (03:37)

Exactly. You did the same thing I did. I said, doesn't make it. This is sounds. Yeah, it's not for me. So I finished my workout, got in my car, and I no sooner got to the first traffic light on my way home to where a light bulb went off in my head. And it said, wait a minute. You'd be making you'd be keeping the insurance company honest because they could get cash out of their life insurance policy. And at the time, those individuals were using it to get medicines were readily available.

 

They weren't FDA approved. heard of the movie Dallas Buyers Clubs come to mind. They use those cash in many cases are alive today because of it. So that transition from what was then the viatical settlement industry to the turn of the century, we were to say that, but around the year 2000, this kind of swung in the other direction and became the life settlement industry. And that's a big different there is that we're helping seniors, people 65 years or older, sell an existing life insurance policies, as you mentioned.

 

that they don't want, they don't need, or they can't afford. So they're deciding they don't want it, they don't need it, can't afford it. So without us, the options are lapse or surrender. So when you think about a life insurance policy made cash surrender value, that essentially is a life settlement offer by the carrier. That's their only offer, it's non-negotiable, that's what it is, take it or leave it, it's up to you. A long, industry comes and says, wait a minute, we'll go out to a whole litany of difFerettnt type of accredited investors.

 

pension funds, et cetera, who will buy your life insurance policy based on your mortality in their mind and give you a cash settlement today that you can use for what you want to use it for, which in this case, in many cases, it's retirement. To retire more comfortably, whether it's to age in place and retrofit a home, whether it's to move into facility for memory care, et cetera, it's your option, it's your money, can do it. So there's no pressure. We call it a free non-binding appraisal.

 

This is not something we tell you that you should do automatically, as you mentioned, but it's something to compare to the other options you have. So if the other option is, I've got a rich uncle that'll pay my premiums, that might be the better way to go. But we're there to provide answers rather than just to say to you, your only option is to let the policy lapse or to surrender for the cash run. So that's really the way it's morphed. We are a financial planning tool, which we usually go to financial

 

planning, ⁓ financial advisors, state planning attorneys, and kind of guide them into position where their clients come to them with all this life insurance they bought over the course of their lifetime. In many cases, they bought way too much. Some of it's performing like it's supposed to, and other policies, quite frankly, they should have never been sold to get with. Must have been a trip involved, which is why they bought it. So let's get rid of that policy. Maybe we take the cash we receive out of the policy that's underperforming, and we use that to pay down

 

what we owe in the other policy to make the premiums more affordable. But those are all things that the financial planner and the individual considering some of their life insurance policy gets to talk about. We don't get involved in that. We do our job, we get it, and then we get out of the way. So if that answers your question, can...

 

Matt Feret (06:51)

It does.

 

Thank you. So I'm going to ask about the terms and I know you're in the life insurance industry. I've spent a long time in the insurance industry as well. So I'm sure we're going to be throwing out life, you know, insurance terms that you and I both know for decades and people listening going away. What is that again? So I'm going to get to those, but before we define terms, why do you think this topic makes people uncomfortable or skeptical when they first hear about

 

Rob Haynie (06:55)

Sure.

 

Well, it's another great question. First of all, I'd like to say that about 90 % of the country doesn't know what this is. I don't think they still know. The commercials run on TV, whether they're late night or during the day, the news channels, et cetera. If you don't know what the life settlement, the words life settlement mean, connected to each other, that's just noise that's on the screen. It's going by you. So we're trying to create a situation where people are educating their clients. So you talk about the folks that listen to your show. They may have parents.

 

Matt Feret (07:24)

Yeah, right.

 

Rob Haynie (07:49)

they're in the same situation, that they've got life insurance policies. And if you're not talking to them about that, maybe go ahead and cancel the policy and never have a conversation with you. And that's money you've left on the table. So there's not enough sellers, if you will, for the number of buyers that exist out there. So it's an education deficit is what I call this. So why do people get nervous? Because the first instinct is like I'm being taken advantage of. Someone's taken my life insurance away. Well, let me give you another reason why it's not true.

 

Without me, 90 % of every life insurance policy that's ever been written will never go to claim. 90.

 

Matt Feret (08:28)

Wait a minute, I always joke around that life insurance is literally the only type of insurance you're guaranteed to use. Because we're all gonna meet our maker, but you're saying because of the lapses and the people just giving them up and no longer paying premium, is that why that 90 % number is there?

 

Rob Haynie (08:28)

That's 90%.

 

Well, think about it.

 

Yeah.

 

That's

 

a well, twofold. most life insurance, the bulk of life insurance is sold in the group employer scenario. So when I get out of college and I get my first job, let's make it up, ABC company, I worked there for three years, and then I get a better offer from DEF. I had life insurance for those three years I was there. I could literally take that policy with me, portable and pay the, guess what? It's a lot more expensive to do that. So they let it lapse.

 

Matt Feret (08:58)

yeah.

 

Rob Haynie (09:17)

get another policy. This continues on through the cycle until maybe they buy their own life insurance on their own. So that's most of the life insurance that gets lapsed. But the other is that people buy life insurance and then they get down the road. And then all of sudden they say to them, hey, your premiums are going to go up next year because you're 65 or 70, whatever the number is. In the case of a term policy, you have to convert it at age 70. That premium now you go to a permanent policy. It's now five or six times as expensive. People are like, wait a minute.

 

I don't want to pay this. So they let it go. If they knew there was an option before they did that, they might go out to a company like myself or many others that are part of our industry and say, is there a possibility someone would give me more than the $36,000 I'm going to get when I surrender the policy? And hopefully there is. But guess what? If you don't ask, you don't know. And if you find out there isn't, at least you can sleep at night knowing that you tried and looked. So that's really

 

But we tell people, don't be afraid of it because you don't have to take the money. We can give you the money and you can take the money actually and have it for 14 days. And if something's not sitting right with you, can unwind the transaction, give the money back and get the policy back. That never happens, but it's peace of mind for the consumer to think I'm not trapped. I didn't make a hasty decision. The hasty decision is letting it lapse and then finding out two weeks later because you know what the commercial means now and your policy is not there to sell.

 

Matt Feret (10:44)

Is the and thank you and will ask a question on this topic before I get into the details of it. ⁓ You mentioned marketing right and I did at the onset as well. The late night TV commercials. ⁓ Has the feeling or the lack of awareness or if they're aware the I guess the smartiness lack of a better phrase.

 

Is it because of the marketing or is it because of past bad actors or just confusion? What is the feeling behind that? Why people A are either A unaware or B if they're aware, you know, it's a middling to a to negative connotation.

 

Rob Haynie (11:20)

So I would say all three, honestly, because everybody's gonna be in a difFerettnt bucket. But the answer is, if you knew about the industry prior to this industry, the problem was, and the bad taste that left people's mouth was investors were buying those policies of people that had HIV and AIDS. And virtually overnight, they're not gonna die anymore. So that's a bad investment. You've invested in a policy, okay? Somebody won, somebody lost.

 

Matt Feret (11:43)

Well, yeah, good outcome with bad investment, yeah.

 

Rob Haynie (11:49)

So that's one of the best. Now we're 25 years past that. So right now there's really not a negative connotation. Life insurance carriers like to paint one, you know, they'll say things like, and since I'm on your show, I'll just tell you, they'll say things like, well, you never know who's going to shoot you. You know, they'll say things like that. Literally, literally say that like to the client, like you could get killed. Well, you can get killed by anybody for any reason. However, if you think about the

 

effort it would take to solve that crime. The person buys the life insurance policy, it's with that transaction, that's one of the things they're going to look for. And all of a sudden, two days later, Mr. and Mrs. Smith has passed away suspiciously. They're on your track. They're going to find you. Guess what? It's never happened. Same thing I used to say on panels with carriers, and they would kind of bring this up inadvertently. I'd say, know, that reminds me. So if I bought an annuity from your company,

 

and I gave you a million dollars for a spia today and you ran me over tomorrow, that would mean you'd make a million dollars. He goes, we would never do that. I said, well, Touche, that's who's buying the policies today. These are large pension funds. Nobody's into that game. But those are things they like to put in people's mind to make them not keep the policy in force. Their goal is to not pay death claims. Think about a business model, how I could prove this to people. As I say, go back to 2008, 2009.

 

the financial crisis. They handed out TART money to all the investment banks, right? How many insurance companies got TART money?

 

None. they did, and AIG's whole bucket inside of that was their insurance division. That was the healthiest part of their entire operation. All the people that bought all those crazy investments, right? The mortgage-backed securities, bestowed tranche opportunities, whatever they call them, those were garbage. But the insurance companies, as you all know, they're the healthiest corporations we have.

 

Matt Feret (13:26)

Yeah, no, they let what AIG fall. Yeah.

 

Rob Haynie (13:53)

They don't buy anything other than real estate. It's really all they buy. I mean, they always go look them up, go into any city you fly into when you'll go down and look at the buildings. And if you ever get some time, free time in the hotel, look who owns each building and it's all insurance companies. So they're healthy, which is why I invest.

 

Matt Feret (14:07)

Yep. I agree that there was a guy of

 

a number of years ago said basically the same things that you ever want to look at the, you know, a good snapshot of the financially most, healthy slash has the most chance for longevity. Look at the names and the marquees, the tallest buildings in any city you're in. And so I started looking and you're right. It's banks and insurance companies.

 

Rob Haynie (14:29)

or my other friend says, it's the same exact analogy you made, but he had center field neon signs in baseball stadiums. They're there. And they're there. And so they're...

 

Matt Feret (14:36)

I'll start looking there now. Alright, so

 

we let me slow this way down just for a second. So plain English. What is a life settlement?

 

Rob Haynie (14:42)

Go.

 

The life settlement is a sale of a life insurance policy that you currently own or that the insured, your family member currently owns that they no longer want it, they no longer need it, and they can no longer afford it. And that is now sold to a third party investor for a price, as you mentioned in your introduction, somewhere higher than the cash or renter value or in the case of a term zero and less than the death benefit. And that's it.

 

Matt Feret (15:13)

And what problem

 

does it solve for someone who owns a life insurance policy?

 

Rob Haynie (15:19)

So if they had a life insurance policy that go back to the fact they don't need it, they don't need it, but they have another specific need. I use the word aging in place has become a big topic that we discussed it for last year. They want to keep the home. They also want to keep the home and retrofit it so they can age in place. So there's going to be ramps and doorways are going to be expanded in case of a wheelchair, bathroom, all the things you see on TV for walk in tubs, all that takes place.

 

Now the home is set up for you're fine now, just as it is. And as you start to need care to come in, they can come into the home and you never leave. The most important thing that does is the asset, which is that house stays in the family. You're not selling it, taking that cash and handing it to an assisted living facility, which you don't own anything there. They just take the deposit and if you live 25 years, they almost look at it an insurance policy. They sphere through the average age of their.

 

person that comes in, how long will they live and how much money will they be able to keep. So this gives you options. I keep saying this all the time. This is not, you don't have to even know what you're selling the policy. In case of unaffordability, you don't have the money to pay for it. So what are your options without me? Lapse it, surrender for the cash. And now I come by and say, okay, you're going to get $36,000. Here's $180,000, which is the better option. So now they have $180,000.

 

and they can use that for whatever they see fit. We have clients that buy cars and you literally drive across the country. That's what they do with their money. It's their money. They're set up for everything. They've got everything else covered. They just don't want to pay that premium. They have the kids have grown up, the house is paid for. There's no need for that policy anymore, especially now that they've increased the premiums on it dramatically.

 

Matt Feret (17:11)

So why do so many people let policies lapse? ⁓ In other words, they don't pay them and they just let them expire. Or they surrender policies without realizing other legal options exist.

 

Rob Haynie (17:26)

because they don't know. Lack of awareness. They just don't know. So when you buy most life insurance, you have a life insurance agent. Most life insurance policy owners are orphan policy owners. They've either been adopted by the next agent in the queue at the office or if they amass a larger net worth, they bring all their financial assets with them to see them. Most of those people, those financial professionals, believe it or not, won't even ask their client if they have any other life insurance.

 

What are you bringing up? So we try to teach people to say, make sure you're asking that question. Gain control of that asset. You want to be on the record as the agent of record. You want to get all the lapse notices. You want to be aware of all of the options that exist around your client. So ask those questions. So that would be the easiest answer to give you there.

 

Matt Feret (18:14)

Okay. And what types of policies does this work for? You mentioned earlier term and I'm going to do a, I'm not a life insurance sales person, but ⁓ term is you basically rent insurance, right? You get a 30 year term. a fixed rate. say, if I die sometime between point A and 30 years, get $500,000 worth of life insurance. You know, it's 1500 bucks a year, whatever it is. ⁓ Can you, but, there is no cash value on this. You're just literally renting insurance.

 

which is the most popular and a lot of stuff you see on TV, right? Can you do this with term? I wouldn't think you could. Really?

 

Rob Haynie (18:49)

Yes, you

 

can. Here's why. So if you're 66 years old, give you an example, million dollar term policy that's going to expire at age seven, which is when most people just let it go. They just don't do away with it. The buyer sees that policy for a couple of reasons. One, he's going to, if you have a long life expectancy, he's going to pay you very little for the policy, but it's more than you're going to get otherwise because you're going to get zero.

 

whatever that little means, but there's a conversion commission that's going to be generated when they convert the policy to a universal life in most cases, sometimes whole life, mostly universal life. That commission allows that buyer to manufacture an offer. That's I could be compensated. That's how the seller could get their money plus some money from the buyer. And they'll try and amass as many of those longer life expectancy policies as they can.

 

and consider they're all going to go and live 20 years. And you say, who's going to want to buy a policy or policies that aren't going to do anything for 20 years? And I mentioned pension funds before. Their liquidity needs are so far off in the distance, they like buying this life insurance policy as an asset, alternative asset, if you will. Here's why. It's uncorrelated. When the market goes down

 

3,000 points or 15 points or 6,000 in a week, whatever it is, chaotic financial conditions, what happens to the policy that they own? Death benefit stays the same. The life expectancy on the insured they bought it for stays the same. The premiums stay the same. So it's stable. They want to buy as much of this as they can. And you're buying ⁓ A++ rated paper, it's commercial paper from the strongest financial institutions on the face of the earth, the United States.

 

life insurance industry.

 

Matt Feret (20:45)

a lot of sense. I didn't think about it that way. ⁓

 

Let me pivot just really quickly. And by the way, you can go whole life insurance too. So if you've got a whole life insurance with cash value, how does that work?

 

Rob Haynie (20:58)

You could do whole

 

life. Whole life is least purchased policy because people don't really sell them as much as other people, because they tend to be working better, honestly. ⁓ They just do. They're harder to pin track down in terms of what's going to cost premium wise to keep them going. It's not really a policy that the appetite for it is great. You can sell them, but typically people that are

 

a little bit more impaired than others, someone with a shorter life expectancy, maybe 10 years, 12 years and lower.

 

Matt Feret (21:37)

And

 

then permanent, that's the third and basically last kind, right?

 

Rob Haynie (21:40)

UL, that's GUL, IUL, UL itself, those are the most bought, most sold policies in our industry.

 

Matt Feret (21:47)

Okay. And at what point does this normally conversation come up from your standpoint? You say financial advisors who know it or people who are just looking for options. Does it come up around quote unquote retirement or health changes or caregiving needs? And does it come up with, you know, people like me who've got, you know, an older parent that may not know about this stuff? Where does this stuff normally come up?

 

Rob Haynie (22:13)

Matt, you're great at answering questions where you've answered all the answers. every one of those scenarios is exactly. No, I mean, that's good. I'm being truthful with you. Those are, you never know. I mean, every life insurance policy that I look at is a snowflake. They're all difFerettnt. It could be the same age person who lives in the same town with the same policy. And trust me, everything's completely difFerettnt when we go and analyze the policy. So when does it come up? Hopefully it comes up

 

Matt Feret (22:17)

⁓ I didn't mean to do that.

 

Rob Haynie (22:41)

from what we talk to our advisors, that they're conditioned to be on the lookout for annual policy reviews, any inconsistencies in the answers they get from the clients in terms of their overall ability to continue to pay those agreements. Lapse notices, grace notices that show up in the office because I told them to become the agent of record. They're getting alerted to Mrs. Smith hasn't paid her premium. Is she gonna pay it? That's a sign of trouble.

 

So that's what you would do. Or the client will come to you and say, look, I don't want to buy this. COVID taught me one thing and one thing only as relates to my industry. Life insurance is a luxury. Nobody is sitting there going, Hancock needs this money, but I also got to eat. I'm going to give Hancock the money. They're not giving Hancock the money. They're buying their food. They're buying their medicine. They're paying their rent. They're paying their mortgage. They're paying their car. They're paying their insurances.

 

things they do every day. And life insurance was getting thrown away. Now COVID was a double-edged sword because everyone thought they were going to die. So like, how do I keep the policy? do I keep the policy? And if they couldn't keep the policy, selling was an absolute option for them because now they had cash. So we can also do along those same lines is we can split a policy in half. So if they got a $500,000 policy, they can keep 250, sell 250. Or we can have what's called a retained death benefit.

 

say well what is that? That's when they come to you and say okay you don't need money as much as you need coverage. So I've got a million dollar policy you want to get rid of got a long life expectancy I'll tell you what I will put you on record you at the insurance carrier for 20 % of the death benefit. I'll take over the policy I'll give you five grand now you'll have life insurance you'll never make another premium payment as long as you live.

 

And that's what people do who need insurance but don't have the money to pay for it. So we can work in any one of those ways. And that's all happened over time because everybody's difFerettnt. A of people think, they're selling it because they need money. No, they're selling it because they don't have any money and they need life insurance. So this is a way to help them with that.

 

Matt Feret (24:53)

I got it. I think I got it. But tell me tell me if I don't got it. Alright, let's I'm going to just give you a hypothetical situation ⁓ and see if I've got this right. Let's say I bought a million dollar term policy. That's 30 years. And let's say 20 years in, I've got all my kids out of the house. The house is paid off. I've done really well. ⁓

 

Rob Haynie (24:58)

You

 

Matt Feret (25:21)

And now I'm not really sure if I need that policy for the last 10 years, but it's still costing me. I don't know. Two grand, two grand a year. And I go well, I could just quit paying it because I don't need the $1,000,000 if I die in the next 10 years, because I've done well or or maybe I haven't done really well and I don't want to keep paying the two grand every year. But you know the needs have changed.

 

I'm in my 50s or maybe early 60s at this point. Kids are off on their own. You know what I mean? Is that a decent scenario for you to pick up and go on? So if I sell you that life insurance policy and you do like a split, ⁓ then if I die, let's do 50-50 split. If I die, you get $500,000 and my estate gets $500,000. Do I have that right? Or is that a bad example I just gave you?

 

Rob Haynie (26:11)

Well, no, that's a good example, but the only problem is you would never get 50 % of it with being in your 60s and a good health. So it's all gonna be dependent upon, it's all gonna be dependent upon your life expectancy, otherwise there's your health, how long will it take to those premiums versus what you already have in your hand now. So in a case of a term policy, you have nothing in your hand. So if you were, I'll change your hypothetical.

 

Matt Feret (26:19)

Okay.

 

Yeah, yeah, hit it back to me. Okay.

 

Rob Haynie (26:40)

If you're 70, 70,

 

well, keep it a term. If you're 69 years old and you got a term policy and you've got a host of medical issues, there's zero chance you get new insurance. And if someone did write it for you, it would be so expensive, you'd never buy it. So you're thinking, okay, what are my options? But you need life insurance. You don't really want to pay the premiums anymore. So that's where the retained death benefit.

 

what percentage of that will be based upon your life expectancy, but you would go from having an expensive life insurance policy or worst case scenario, getting rid of it altogether, and now having some death benefit and they're making another payment for that for rest of your life. So that would be somebody that's got, you might get maybe another 20, 30, $40,000 in cash, $50,000 in cash plus the retained death benefit. And that'd be a scenario for someone that's in their 60s with health issues.

 

closing out at 80 and you got a UL policy and you've got a.

 

Three, your life expectancy. Okay, first thing we would tell you is if you can keep this policy somehow, some way you should, because you're gonna, you know, that death benefit coming to you and your family should you need it. But if you don't have that need, then you're gonna get a lot of money. Then you might get 50 % of the death benefit, 60 % because your life expectancy is short. That's the difference.. So the shorter your life expectancy, the more money you can expect to receive when you get to be

 

two years or less of life expectancy, that's when you move into the radical settlement range again, that's tax free, but you're also very, very sick. We never want you to sell your policy there, but in all honesty, some people just have to.

 

Matt Feret (28:33)

⁓ It makes sense when you say it, but it's kind of weird, right? If you think about if you zoom back out and go like you have the chance to get more money out of your life insurance policy, the closer you are to death. It's I mean, it makes sense, right? Because what you're doing is you're giving your percentage of your death benefit over to the company you're selling it to, which stands to make money. I guess the faster you die, right? ⁓

 

Rob Haynie (28:47)

Mm-hmm.

 

Well.

 

Matt Feret (29:02)

I mean, it just it just works the opposite of most things, right? Because health care gets more expensive as you get older, right? Things you know inflation. The longer you live, the more inflation you experience. You know your $25,000 car 20 years ago is now 50 like it just it just seems opposite of the way most things work. I get it. It's just weird to think about it.

 

Rob Haynie (29:06)

But think... Yeah.

 

When you're, when you're.

 

Well,

 

think about when most people buy life insurance, right? When they're younger and it's cheaper and they have all the reasons in the world they need it. They're starting a family, they just bought a house, they just started a business, whatever the reasons are, if something were to happen to one of the individuals in the family, the life insurance proceeds help cushion the blow and keep people in the right track for the grieving period and then getting assembled against your feet, planted back on the ground and going forward.

 

what happens when you're 30, 35, 40, you have that life insurance, now you're 50, 55, 60, and the kids, they're gone, house is paid for, you're retired, whatever the reasons are. And now life insurance possibly about to become more expensive. People let it go. So the other reason people like life insurance is that when you're in your, is if you're really wealthy, you're buying it for estate taxes. Now you're not a billionaire, because then you're just self-insured. You don't need life insurance. But if you are,

 

super wealthy and you've got a lot of trust issues and properties and businesses and you want to make sure that when those hand it over to your wife, your children, that the tax obligation is offset by life insurance proceeds. That's the other reason to buy life insurance. So if you don't have either one of them, life insurance is just an expense. You know, do you really need it for your funeral? Maybe.

 

That's where they can carve out a little retained death benefit equal to like 25,000 bucks. So covers your funeral costs, ⁓ which most people need because they'll spend it otherwise. ⁓ So this is something that every single one of those, we're very rarely working directly with the consumer. We're usually working through an intermediary, but sometimes you work with consumers and we kind of give the same advice to them. Find an elder law attorney local to you, sit down with him or her, discuss what's happening here.

 

So they get a game plan for you, should we get this money? That's what we suggest.

 

Matt Feret (31:18)

So then who is, and thanks for walking me through that and also taking my scenario and making it better. ⁓ Who is typically a good candidate? You mentioned ages and financial situations, but who typically is a good candidate to explore this option?

 

Rob Haynie (31:36)

Oh, so I would think someone who's in their 70s, regardless of their health, is gonna be a good candidate for this. So 75 years or older is somebody that we look for. I think you can get too old, I think you can get into your 90s and then people start to get fearful that, well, they made it to 90 and they're drinking a martini every day and smoking a cigar, maybe you don't wanna buy this one. And I'm being honest with you, that's what they'll think, because they're looking at the medical records.

 

There's no health exam. No one has to go to the doctor, give blood. It's just all based upon your current medical records. So someone in their seventies who doesn't want the policy anymore, because the reason I suggest say that is they're going to take the money and they're going to live. You know, I always say we're going to put life back into life insurance. So you paid for this life insurance. You have had life insurance up until you sell it. So it has been there. So you have used it. You just didn't use it the way no one wants to use. You don't want to die.

 

Now you get the money out of the policy which you otherwise throw away. And now you can take that vacation you've always wanted to take. You can rent your fifth home, you can buy that car, you can pay for your grandkids college education. All those things become an option because that money's been freed up. It's no longer tied to that life insurance policy and ultimately to your mortality. It's now put back into the real world and the most important part of your world.

 

Matt Feret (33:00)

If I have a cash balance life insurance policy ⁓ and I don't want it anymore or I don't need it anymore, is it better to just cancel the policy and take the cash value or should I look at this option?

 

Rob Haynie (33:16)

Well, you're too young. But no, anybody who is 65 years or older that has that exact scenario that you just laid out for us is somebody that should look at a life settlement. Even if we just say, nope, no one's going to make an offer on your policy. Because now you can put that in your memory bank and say, OK, I can't do that. So I got to keep the policy and pay the premiums, or I got to just take the cash.

 

Matt Feret (33:19)

Well, fair, but you know, at some point.

 

Rob Haynie (33:45)

Some people use the cash to pay the premiums because they want the life insurance. And then when that runs out, that might be an opportunity to try and sell it with us. So those are, I mean, like I said, they're all, it's all snowflake individual difFerettnces, but you should never, you know, if you're 50 years old and you have cash render policy and you want to just cash it out, it's cash it out. Cause that we're not going be able to help you, especially if you're healthy. But if you've got health conditions, I don't care what your age is, we can help.

 

Matt Feret (34:15)

So who, that's the good candidate, age-based kind of situation-based, but who is certainly, or most certainly, probably not a good candidate to explore this option? And you mentioned age, right? Is it age or is it other things? Who's not a good candidate, probably?

 

Rob Haynie (34:16)

Bad health.

 

Age,

 

age, health, people that have large loans and their life insurance policy, policy is just upside down. Super expensive premiums, long life expectancy, and addition to that, a loan is probably not a good candidate. So the other thing I'll say is this, when I ask somebody how you're doing health-wise, for 32 years, I get two answers. One will say, I'm doing great.

 

So you assume he's in great shape and you'll call someone else and they say, I'm terrible. I'm in bad shape. Well, what in reality has happened is the guy who's doing great has stage four cancer, but today he feels good. But you got the I'm doing great part. And then you got the other one that I'm doing horrible and she has a abscess tooth. So that's why we collect medical records because everyone will always say, you don't understand how sick I am.

 

but you'll see their medical records and really begin to see like they don't drink, they don't smoke, they exercise, all their blood levels are perfect. ⁓ But they're old, right? Those can still sell, but they're not gonna get as much as the opposite of that. Someone who's drinks and smokes and has all kinds of health issues and stents and heart, strokes, all those types of things. And here's the funny part. That's not funny, but it is. The person that has all the problems

 

could outlive the person that has no problem. Because that person could find out they like pickleball and then have a heart attack in August and the other guy could also quit smoking, quit drinking. So that's why the buyers in our marketplace buy hundreds and thousands, hundreds if not thousands of these policies. Because they want to lay out a bell curve knowing that somebody, somebody was supposed to die here, but somebody could die right.

 

Almost as soon as they bought the policy and then of course you got people that go a lot longer than that so over time You'll get that nice mix where they'll Pass away at the right time as an investor because you need both people to succeed in this You certainly need the client to sell the policy for far more than and get through an insurance carrier But you also need the investor to make a return You don't want to get make too good of a return But at the same time you wanted to make a return so they continue to be an investor So I don't root for them

 

But the same time, I expect they know what they're doing.

 

Matt Feret (36:54)

Yeah, kind of zooming back out a little bit into making this a part of retirement decisions. ⁓ Why is it important to frame this type of move as one option among many, not necessarily a default solution?

 

Rob Haynie (37:14)

So we like to think of this as a financial planning tool and with that retirement. So if you have life insurance, forget that we even exist, what is the goal of that life insurance policy or policies for you as it relates to your retirement? Why do you have it? And if the answer is, I don't know, then maybe that's the candidate to see if the life settlement option is.

 

better for you given you here's how much money you're going to get if you were to successfully sell your policy. What could you do with that additional money? Okay, so that's for the financial planner to decide. It's not for me to decide. ⁓ So life insurance, we argue that, you know, this in 1911, the Supreme Court decided that life insurance had the same property had the ⁓ characteristics of ownership and real property as does your home. So it became basically a bill ability to sell in 1911.

 

So putting that together with it's a valuable assets, we want to know what it's worth. Just like we want to know what your house is worth. So why not go get it appraised, whether you're going to sell it or not, just to know what it's there, what it's there for. And then decide, what do you really want to do with it? What are your goals? If it's not, I need the life insurance because I got this business I'm going to sell to my daughter.

 

and it's in a trust and she's the trustee and it dies, this is the tax liability. So the life insurance proceeds are gonna really offset that. Then we're gonna keep the life insurance policy. So the goal here is to just make sure that people understand that they own a life insurance policy. And in many cases, it's the second largest asset they own. Of all the assets, including their home. They don't own a home, it's the largest asset they typically own. Let's find out what it's worth. Because the life insurance company is not gonna tell you. They're gonna tell you what it's worth to them.

 

to give it, but not what it's really worth to you.

 

Matt Feret (39:09)

And they want those premiums coming in. You know, what you just said I've never even heard, but it makes all the sense in the world. If you own life insurance, it's an asset.

 

What do you do with that asset? If retirement is correct asset allocation, we always talk about pensions and 401Ks and IRAs and you're refinancing your home or downsizing. Boy, I don't know that I've ever heard. I mean, it makes complete sense, Rob, but I don't know that I've ever heard of it as an asset, but you're exactly right. And then you're right, if it's an asset, what is it worth? Not just to you from a utilitarian standpoint, what is it worth?

 

In the open market, right? Same thing you said you made the analogy with with the house. Sure, houses worth you. You utilitarian value. I live in it. It shelters me from the storm. I understand it. I know when I replaced my roof last and you know what that you know the cranky heater is. But it's a place for me, but it's an asset and I can either. You know the value to me is difFerettnt than the value is open to the open market. It's the same thing with life insurance. Never thought about it that way. Makes a lot of sense.

 

Rob Haynie (40:20)

Well, I have to think of it that way because that's the only way it makes sense to people. So they can put them in a position of owning something like a home and they know how valuable that home is. I want to realize their life insurance policy is almost as valuable because they can't live in it, but they can take the money and improve the house that they're in that we talked about here and use it to buffer that to make it even better for you as you age forward going out 10, 15 years.

 

And then you're leaving that house to your children, your grandchildren, as opposed to just letting it go.

 

Matt Feret (40:52)

Yeah, so

 

you mentioned, you trips. ⁓ You mentioned, ⁓ right, making sure you've got no step showers, that sort of thing. How do you know, in all your 30 years, how do people typically use these proceeds when it does make sense for them? it income support for, monthly cash flow? Is it long term care? You mentioned assisted living or memory care, is, mean, geez, the

 

prices on those things longer term for memory care nuts or just simplifying finances and getting stuff off like how what do you normally see?

 

Rob Haynie (41:30)

So ⁓ there's no one answer. So it's all the above. ⁓ I'll you the best example. So one of the first client I got to know going back into HIV AIDS, ⁓ he had a hip, some type of a hip surgery, ⁓ and he got AIDS through infected blood. And he was going to die. was a matter of fact, this was like in 1995.

 

He had, I think it was, don't know exact number, I'm just making up at this point, seven, eight, children, all kinds of grandkids. So he sold his policy and he was like near death, but he still was in good shape to do stuff. He could still do stuff. had good days and bad days. He paid for an entire week at the wilderness lodge in Disney World. He sent me pictures. Everybody came down, grandkids, the T-shirts, the matching T-shirts, all that.

 

big smile on his face, all paid for by the proxy of his life insurance policy. They didn't want anymore because he just couldn't, he wanted to do this. That's what he wanted to do. So the memories that obviously he took with him to the grave and then the grandkids and the kids will never forget that because they were a family that that wasn't something that they just had available cash to jump on a plane and go to Disney World. ⁓ You you mentioned prices, how much,

 

they cost for things. You mentioned memory care. The other day on a podcast I was on with another guy, he said this to me, which I'm going to steal, ⁓ which is, if you can go into a memory care facility in South Florida, which we both were both from, he thinks it's cheaper to go to the Four Seasons and check in for the rest of your life than it is to stay in the memory care facility. He said that. And I thought,

 

Matt Feret (43:26)

Yeah, I've heard that before.

 

Rob Haynie (43:27)

And he's.

 

Matt Feret (43:28)

like the price out a year worth at the Four Seasons. It's likely cheaper.

 

Rob Haynie (43:31)

Same thing.

 

So, you know, because you have no problem getting people to come take care of you because you're at the Four Seasons, right? You get your sister, your brother, your daughter, your cousin, they're all coming because they're there. And it was kind of, it's sad, but that's the truth. So this is this aging in place has become like the new thing because as the wealth advisor, you're going, your home is paid for. Your tax basis is little compared to what it could be. The person who buys this is going to pay seven times the taxes.

 

So it's more affordable for you to live there than it is for them. So stay there, you know? And then these homes are literally becoming a type of a ⁓ style of home that is for sale. They'll say like aging in place home. And they'll have all these homes that have been already redesigned, the bigger driveways and the ramps up and all that stuff. So people are looking for them to do the same thing. To move down here, get out of New Jersey, get out of wherever they're getting out of.

 

come down here for the weather. Of course, we were cold a couple of weeks ago, but you just never know. I wish there was a simple answer to everything. Everybody's got a difFerettnt reason for what they want to do with it. Mainly it's just...

 

I try to give you the answer. try to give you the problem, the math problem. Is it better to keep paying the premiums for life insurance policy? Because you just need and enforce and do you the money to do it? Or is it better to sell it for this much and do A, B or C, depending on what you've been advised by your financial planner? And I think most of the time we give, as I mentioned, I'm on the board, ⁓ chairman of the board of Lisa.

 

And the last four years, we'll do a fifth year, we do a data collection study where we ask each provider, which are the buyers in the industry, how many deals did they buy? What was the aggregate face? What was the aggregate surrender value? Right. But how much money, how much money did the client get? And every year we conclude that they get a percentage over and above the cash. In the last four years, the average is six and a half times.

 

So if you get $100,000 in cash, we're gonna give you $650,000 in a settlement. That's to you. ⁓ That's significant. That's not like getting $18 more. That's $550,000 more ⁓ on average. we're proud of that. We're also proud of the fact, and here's another good reason is we've had zero consumer complaints as an industry.

 

in the last five years. And it goes, wow, that's incredible. But I tell you why, because it's not, it's, we're not, going to kind of, I'm going to kind of water it down. We're giving people more money than they would get with any other option they have. So naturally they're going to be happy. You know, we still people when they, when they might not get the offer they want, or they get an offer that's less, they're still happy because we gave them an answer. They're given an answer on something they didn't even know they could do. And that's why we like it.

 

Matt Feret (46:15)

Wow, I was gonna, yeah.

 

You've been deeply involved in regulatory and professional standards. ⁓ What protections are in place today for consumers?

 

Rob Haynie (46:54)

So first and foremost, their privacy. their medical records were not intrusive. We're not coming to your house. We're not taking your blood and all that. Your medical records are uploaded ⁓ through everything goes out through an encrypted server. So the information is shared with the buyers back and forth. No one leaks that information out. Pretty safe, you know, in the sense of the world today. We can't argue that there are doctors that will still send their clients medical records in the mail.

 

but I can't stop that. ⁓ We try and explain to them, could you try and scan those and email those to us? But ⁓ that's for another day. ⁓ They have a right 15 day right of rescission. The most important thing in the transaction is they don't know who we are. They don't know who my buyer is. So we went out early on, I was part of this, but we decided that we would put a third party escrow in the middle.

 

Matt Feret (47:31)

Yeah.

 

Rob Haynie (47:53)

Okay, so they would hold the money that's been promised the client and they would act as the custodian of the change of ownership from the carrier so that the buyer knew that they own the policy and they would go through everything and make sure it's perfect. Everything's exactly as planned. And then once they do, policy is released and so is the money. So that, and then of course there, they said the 15 day right of rescission kicks in. ⁓ We have had four rescissions since I've been in this business.

 

Matt Feret (48:24)

wow.

 

Rob Haynie (48:24)

Unfortunately, all four of them were people who died in the rescission period. So naturally that would make sense that they were sinned. ⁓ One of them actually passed away two days after the rescission period, but that was, we considered the weekend that it happened and we said, we're just, that's too close, give the money back. Right, that's protection that, that's the really thing you need to make sure is I don't want to give my policy away and not get paid.

 

Matt Feret (48:40)

Yeah, just do the right thing, right? Yeah.

 

Rob Haynie (48:52)

So we have too much at stake not to let that happen.

 

Matt Feret (48:56)

Yeah, and I said this before we started recording, but every two years I'm licensed to for I've been licensed since 2001 for life and health as part of you know what I've done in the past. I just keep it up and every year I go in. do my continuing education credits and I and I see the licensing for this particular piece and I'm always really intrigued by it. Like well, what is that? I mean, I've seen this every two years for 27 years.

 

Why does licensing and disclosure and experience matter so much in this space?

 

Rob Haynie (49:35)

Well, the contracts ⁓ that we give for a class.

 

Matt Feret (49:39)

mean, right, you do have to be specifically

 

licensed for this. You can't just be like, yeah, I sell car insurance and I do this. I mean, this is very specific stuff.

 

Rob Haynie (49:46)

No, no. So you

 

have to be a life and health agent, I mean, excuse me, life and annuity agent. You don't have to have health, just life and annuity. And then you get licensed and then reciprocity allows you to have those in each state. ⁓ That's the, then what happens is, because there's always a fee element of this with the Department of Insurance, is then you have to appoint yourself in Florida. I self-appoint myself, give myself

 

Biradical and Life Settlement Authority. So I'm a life agent with Biradical and Life Settlement Authority. Without having those two, I cannot do this business in the state of Florida. Now other states won't be the one of appointments, but you'll have to have some other way they phrase the same thing. In some states, they don't care. Just life and health, you're fine. 45 states regulate it. 43 specifically life settlements. The other two, Michigan and New Mexico, regulate only biradical settlements.

 

South Carolina is the largest state that doesn't regulate it that's got the most clients in it. ⁓ We treat each state as if it is licensed. So we use the NAIC Model Act ⁓ paperwork. So the same contracts are pretty standard. ⁓ Lawyers did get involved and they're a longer than they need to be, but we're trying to work them down. ⁓ But it's in there just something that they have a right. they want to, if they have an upset with us, they can call the department of insurance, scream and yell.

 

⁓ if they want, it's never happened, but they can. But generally speaking, we want to get moved to transactional log-square as we can. So by a question you're thinking in head, how long does it take? I tell people 90 days, start to finish. Could happen sooner. No one ever gets mad that I said 90 and it happened in 60. They're not like, well, you said 90, why am I getting in 60? ⁓ Never happens. But if I said 60 and it took 62, I'd hear about it for two days.

 

Matt Feret (51:44)

I've, I mean, I'm just, ⁓ obviously this sparks questions in my mind and I've, I've got my own life insurance policies floating around my head. And I say policies with an S cause yeah, there's more than one, ⁓ because as I just said, I've been in the insurance space for a really long time. So when guys like you and me who have been in and around insurance know that, you know, bad things happen to good people. ⁓ and so we all tend to be a little bit overinsured. I mean, we all joke about it, but it's true. We probably don't need all that we've got, but you know,

 

We see it more than anybody else really does. How often should people revisit old policies?

 

Rob Haynie (52:22)

every year, once a year. More if you can, but I would do it, we call it annual policy review. So if you've got a policy that...

 

Matt Feret (52:28)

That's all.

 

Rob Haynie (52:36)

I mean, whatever, try and do it in advance of when you have to make the next premium decision. ⁓ That's something you should talk with your financial planner about. ⁓ Because in many cases, you may have a policy that for some reason just isn't working right. I I have one right now that's blown up. Somebody sold this person this policy to this individual and then they told him to take a loan out. And now the premium is like, I mean, it's hundreds of thousands of dollars. And they're like, I don't have it. I go, you can't.

 

You're gonna have to do something. So we're working on that. They're not old enough yet, but we're trying to get them with the right person and say, okay, fix this, fix this. I've got some really good insurance contacts that can fix bad policies, but they're not always fixable. ⁓ Generally speaking, when you're younger and you get a few bucks in your hand and they don't know what you're doing, like most people, and the guy says, hey, you should buy this policy because you're gonna pay this little bit of money. And then every once in a while, you

 

your policy is going to go up and then you're not going to make the premium payments more. It's going to pay for itself. Those were called vanishing or disappearing premiums. They still are out there. They call them something else. They never work. They always need more money. ⁓ And you just throw money away. Now, granted, I always tell people with life insurance, you were covered. Had something happened to you, you would have been paid the death benefit. So you have to look at it that way. You weren't ripped off in a sense that you owned a condo. You never got to visit and never went to.

 

Life insurance, just like with the car insurance, right? You don't want to go get in an accident and target parking lot because you got insurance, but it's there if you need it. So that's what life insurance is. It's a luxury, but every year for sure, you should automatically, if you're listening and you haven't talked about your life insurance in decades, seek counsel from your trusted advisor and go through your policies. You may be paying premiums.

 

that don't need to pay. More like I tell people all time, most of the premiums that you're told to pay on everything but term is too much. You only need to pay that, to pay less all the time. When we sell a policy in these life insurance situations, the new owner, they don't pay what the premiums carrier told them to pay. They pay the cost of insurance. They pay the minimum necessary to keep the policy in force. And there's ways to ask for that illustration. ⁓

 

You can get that illustration. There's shadow accounts. You can find out that there's other lab space pricing tricks they've done. You can pay, if you were supposed to pay $3,000 a month, a year, you might be $1,800. And everything's the same, just paying less money. Nope, you're not growing your cash value either, because you don't really need to do that. You rather keep your own money, like a term.

 

Matt Feret (55:20)

You know, again.

 

Rob Haynie (55:20)

So they're not all bad, but

 

I'm saying there's a lot of bad ones out there.

 

Matt Feret (55:24)

I've never heard that and it makes all the sense in the world. mean, in my space, the Medicare space, right, I talk about annual housekeeping. That's step five of my method. It's annual housekeeping. It's once a year. You gotta look at it. I've never heard anybody tell me to, like literally never heard anybody tell me to look at my life insurance once a year. I mean, I'm sitting here listening to you going, good Lord, how long have I had life insurance? And when was the last time I looked at it other than just pay the damn premium once a year?

 

or twice a year. Never. What am I doing wrong? Well, it sounds like I need to make this a bigger part of my own financial planning.

 

Rob Haynie (55:57)

 

Well, that's right, because now that you know what we've talked about, and you're a smart guy, right? You wouldn't be doing what you do as successfully as you do it if you weren't. Now that you know it's there, you'll think every time you see that commercial on TV or every time you're taking your test, right? Or every time you think about the life insurance premiums, if you see something in a magazine, you'll think, I should go look at my policy. My policy, for example, not to give anything away, but I'm 61.

 

So when I'm 62 in June, I have to make a decision by the end of next month to keep my term policy to convert it to a different policy. And let me just share with you, the premiums are only going to be seven times more expensive a year, only seven times more. Now, what do you think happens to most people who have a premium that goes up seven times more a year? They let it lapse.

 

Matt Feret (56:44)

Only.

 

not gonna

 

pay it. They let it lapse.

 

Rob Haynie (56:58)

So.

 

Matt Feret (56:58)

What

 

how do people go? Where could people go to learn more? How do they find this if they don't have a financial planner or they say something to financial planner and they get crickets from the email because they don't know they don't know how to do this. Where can people go to learn more about this with that education first? No pressure approach.

 

Rob Haynie (57:19)

So first and foremost, I would recommend they visit our association website, which is www.lisa.org. That's L-I-S-A dot O-R-G. My website is www.lisettlements.com. You can call me on my cell phone, 954-599-4433. I promise I'll call you back if I don't answer it, because I'm afraid you might be a spam call.

 

and but leave me a detailed message and I'll get right back to you I promise. And my email is rob at lisettlements.com.

 

Matt Feret (57:54)

And I'll put all of that on the show notes on the episode page on the website. So if you're driving and don't want to hit that 10 or 15 second back button 15 times and trying to remember it, it'll be on the show notes. Just go to the page. ⁓ Rob, this has been super helpful, selfishly for me, which is also part of the reason I do this show, because I learned so much and you really have taught me a bunch of things.

 

Rob Haynie (58:06)

You

 

Right, well that's what...

 

Matt Feret (58:20)

Yeah, I didn't know. And so and so thank you and hopefully and I got to imagine everybody listening or watching has got to think the same thing. A lot of big takeaways and ahas for me in here that I just frankly didn't know about. So I appreciate the way you approach the conversation. And it's you know, you're not pushing a product. It's about understanding options, protecting people from bad decisions, making sure families aren't forced into choices they don't know even existed. ⁓ And you know, the last thing you said clarity, right?

 

Assess it. a free, you know, a free, you know, get it valued. I mean, that can reduce stress, improve decision making, supports better outcomes over time. And you don't have to do anything. You just have to go check the market. So thank you, Rob, and to everybody listening or watching. ⁓ Thank you. You know, asking informed questions about insurance, retirement income, long-term planning is how you can protect your wealth, your wisdom.

 

and support your wellness as life evolves. I hope you've enjoyed this show. I've enjoyed doing it. Like I said, learned a lot. ⁓ But also thanks for being a part of this community. And thanks for joining me on the Matt Feret Show. We'll talk to you next time.