The coronavirus pandemic has sent shockwaves through economic markets across the globe. Many retirement accounts have taken significant hits, and it remains unclear what the impact might be on other key assets like real estate holdings. Even the employment prospects have changed for some seniors and others who thought they were in stable industries. Quite frankly many individuals who thought they might be retiring soon have to perform a complete re-evaluation of their retirement plans.
In order for financial advisors to get a clear picture of a client’s economic health, they need to start with an assessment of all assets. Figuring out the value of a 401(k) and other retirement accounts, for instance, is easy. Just look at the statements and try not to lament too much about how lousy the year has been. Hopefully, cash reserves are solid, and then the big question: How have other assets been affected? Home prices have fallen in some markets while others have stabilized. Some suburban areas in warmer climates are even looking more attractive because they offer space to both live and work under one roof, while not facing the risks of living in a densely packed city. Realtors and real estate appraisers can offer a credible opinion on the value of homes and other real estate holdings, so your client will know where they stand in that regard.
Advisors should also be counseling their clients on assessing the value of other expensive personal property like cars, boats, jewelry and other valuables. If values have fallen, it helps clear up the financial picture while also offering an opportunity to save on insurance premiums for replacement costs. One thing that many financial advisors have not added to the asset equation is the value of a life insurance policy. Yes, it’s easy enough to find the cash surrender value of life insurance policies, as one only needs to contact the agent or insurance company to get a quick idea of what the turn-in value is. But for clients who are facing economic uncertainty now and are trying to understand how they are going to bridge the gap during the “new normal,” a policy appraisal is a better choice. Brokers who perform life settlements and insurance agents know that the appraised value will likely be higher than the surrender value. With the appraised value in hand, along with the values of other assets, a financial advisor can now credibly counsel a client on what the future retirement picture looks like.
Digging a little deeper on the life insurance policy appraisal, we believe the current economic situation is so unsettled that life insurance agents and financial advisors have a responsibility to educate their clients about how to get a life insurance policy appraisal. A policy can be sold on the secondary market at a rate higher than the cash surrender value, but many clients, and some who are struggling, don’t know the option exists.
For financial services professionals who are helping clients evaluate their retirement goals in light of the pandemic, a policy appraisal is an excellent tool. We can complete one quickly on your behalf, offering a thorough valuation of the policy that will help the client plan better for retirement and perhaps help them bridge a financial gap created by the COVID-19 crisis.