New Exit Options Launched For Life Insurance Policies 

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Niche financial service provider Life Insurance Policy Exchange has launched a new range of exit options for certain types of life insurance policies.

The new offerings provide the option for owners of whole of life and endowment life insurance policies to access funds from their policies prior to maturity and without fully exiting the policy.

Policy owners are now able to retain a portion of their policy at the same time as releasing funds, through a partial sell down, representing a shift (according to the provider) in how these life insurance assets can be managed.

There is also the choice for policy holders to either receive funds as lump sums or reinvest to receive regular payments spread over time.

Policy Exchange MD, Greg Donnison

Releasing the offer last week, Policy Exchange Founder/Managing Director, Greg Donnison, said prior to these initiatives, the only option for people who wanted to access cash from their policy on the secondary market was to sell out of their contract in its entirety.

Donnison said the new options were in response to an ageing demographic of those holding with-profit, whole of life endowment contracts.

“These types of contracts aren’t being sold anymore so they have a sunset book of business if you like,” explained Donnison.

“The underlying owners of the contracts are getting older so the reasons that they are [exiting] are different to what they were 20 years ago when we first started our business,” he said, adding in the past requirements for cash were more around clearing debt or paying off mortgages compared to now where it revolves around retirement-based issues.

He said to date, 90 per cent of their business had been adviser-driven and the adviser community has been integral in making sure that people were exiting a contract in their best interests.

“Retaining the contract can be the best option for the owner of the contract and so in determining what is the best option for the policy owner, we decided very early on that we’d promote primarily through the financial adviser community,” said Donnison.

The Policy Exchange website’s free calculator estimates the likely outcome of partial encashment for a policy: https://policyexchange.co.nz/online-calculator/

This no obligation service is available to both advisers and policy owners.