TRANSCRIPT

Speech-to-text transcription can look a little quirky. Please excuse any grammar or spelling errors.

#93 - Life Settlements Explained: Turning Life Insurance into Opportunity

Eric Blake: Welcome to another episode of the Simply Retirement Podcast. I am your host, Eric Blake, practicing retirement planner for over 25 years, founder of Blake Wealth Management, and I would not be the man I am today without the women in my life. On today's episode, we're going to be talking about life insurance settlements — what they are, why they're often misunderstood or overlooked, and why this conversation matters, especially for women who may be navigating retirement, widowhood, or other major life transitions. I'm going to be joined by Lisa Rehburg, president of Rehburg Life Insurance Settlements. Lisa works closely with financial, insurance, legal, and nonprofit professionals to help their clients benefit from unwanted or unneeded life insurance policies. She focuses on raising awareness of life insurance settlements as an option where appropriate so clients don't unknowingly walk away from policies with little or nothing.

I just want to share a bit of context as well. As I mentioned to Lisa in preparation for our conversation, I recently posted a poll in the Simply Retirement Community Facebook group asking about interest in this topic, and the response was overwhelmingly positive. So there's clearly a lot of interest and a lot of questions around this, and I'm looking forward to this conversation. Lisa, welcome to the Simply Retirement Podcast.

Lisa Rehburg: Thank you for allowing me to be here. Delighted.

Eric Blake: One of the questions I hear quite a bit when starting to help someone build a retirement plan is, do I still need life insurance in retirement? And of course the general answer is always, well, it depends. You likely don't need it for the same reasons that you may have during your working years. It could be replacing lost income or bridging the gap for one spouse from those working years to retirement. But that said, life insurance can still play a role — it could be estate planning, it could be liquidity needs. But you bring a very different perspective on how life insurance can be utilized in retirement. Before we get to that though, I would love for you just to share a little bit about your background and what actually led you to the work that you're doing today.

Lisa Rehburg: I have been in the insurance industry for, let's just say decades, 35 years.

Eric Blake: I say over 25 years myself. So just as a — there's nothing wrong with saying that.

Lisa Rehburg: I pinpointed that, didn't I? I've been working with advisors, insurance agents, financial advisors all that time. I was in corporate for a long time, and about 10 years ago it was time for me to not be in an airport every week. Lifetime platinum with Marriott for a reason. But it was time for me to not do that. And so I left my corporate job and stopped and said, what do I love to do? I love to work with advisors and their clients — it's a passion of mine — but I wanted to do something different that many people don't know about that can benefit clients. I found life settlements, took about a year to research them, making sure it's transparent, regulated, and legal. All of that was important to me. I built relationships and then launched my company.

I fell in love with them because they're unknown and can benefit clients significantly. Our country is aging and more seniors are turning 65 every day, so this solution becomes even more important moving forward.

Eric Blake: So let's start there. You share that millions of seniors walk away from these life insurance policies every single year. Can you share why you feel like that happens? What's your perspective on what's happening there?

Lisa Rehburg: It's really simple. They walk away from about a hundred billion dollars of benefits every year. They don't want the policies anymore, they don't need them anymore, or they become unaffordable and don't fit in a retirement budget. I also hear all the time, "I just never thought I'd live this long." They have universal life policies that have imploded. The cash value has depleted, they have to put more money into the policy to keep it going, and they either don't want to or can't.

Eric Blake: I would love to just set the stage. Can you talk about what exactly a life insurance settlement is for anybody hearing that term for the first time?

Lisa Rehburg: Good question. It's a life insurance settlement — or life settlement for short. It's just a financial transaction. I parallel it to selling a car. A car is an asset you own, and so is a life insurance policy — including term policies. When you sell your car, you receive a lump sum of cash and transfer ownership to the buyer.

It's really similar here. The client receives a lump sum of cash and transfers ownership of the life insurance policy to the buyer. The buyer makes the premium payments and becomes the beneficiary. For them it's an investment — that’s why they're doing it.

Eric Blake: The first question somebody is going to ask is, is this actually legal? Can you talk about that directly and make sure we outline the legality of this strategy?

Lisa Rehburg: Absolutely. It has been legal since 1911. There is a Supreme Court decision called Grigsby versus Russell, and in that decision Justice Oliver Wendell Holmes deemed a life insurance policy an asset that you own. As an asset, you can transfer ownership of that asset to anybody you want, anytime you want. But to be transparent, nothing really happens until the mid-eighties, and that is when the market starts with the AIDS epidemic and viaticals.

Eric Blake: Coming back to a few of the things you already talked about, I think one of the things that confuses people is what actually changes in the policy. These are contracts, of course, so who becomes the beneficiary and who is paying the premiums really catches people by surprise. Can you talk through the logistics of how this transition occurs?

Lisa Rehburg: In terms of the whole process or just the change of ownership perspective?

Eric Blake: From the change of ownership perspective — who makes the premiums and who becomes the beneficiary.

Lisa Rehburg: We go into escrow just like a house. We parallel real estate pretty strongly. Once a sale contract is signed, we are in escrow. Every insurance company has a change of ownership form and a change of beneficiary form. I can change the ownership of my life insurance policy to anyone I want — even you today — just by signing the form, and the insurance company will change it. The same goes for beneficiary changes.

Once escrow opens, the escrow company sends in the change of ownership form transferring ownership from whoever owns the policy — the client, spouse, trust, whoever — to the buyer. At the same time, the beneficiary is changed to the buyer. Once those are completed by the insurance company, escrow closes and within a day or two the client receives their money. I am not saying the entire transaction takes a day or two, but once the ownership and beneficiary changes are done, escrow closes and the client has money shortly after.

Eric Blake: One thing I am curious about — when you take out a life insurance policy there is the term insurable interest. Who can take insurance on whom, who owns it, who is beneficiary. How does insurable interest apply when we are talking about an existing policy and this type of change?

Lisa Rehburg: Yes. Without getting too wonky, stranger-originated life insurance is illegal and should be illegal. For instance, you cannot just buy a life insurance policy on me because there is no insurable interest. We are not business partners. But that is not what we are talking about here.

When the policies were issued, there was insurable interest — spouse, children, trust, business partner. That part is fine. All we are doing now is transferring ownership to another party thanks to Grigsby versus Russell.

Eric Blake: When thinking about different policy types — term, universal, whole life, variable — what types typically qualify or how do you determine if a policy has value?

Lisa Rehburg: The good news is any type of policy can be sold, even group life. Now, qualification depends on how investors look at it. Investors are generally looking for clients with about 10 to 15 years of life expectancy or less. If I am 30 and running marathons, this is not the right solution. Typically we are working with seniors, though not always.

In our world the shorter the life expectancy, the more money buyers are willing to pay because they believe they will receive the benefit sooner. Someone older can still be healthy — 75, 80, 85 — while younger clients may need more significant health issues to qualify.

Eric Blake: That makes sense — someone healthy with decades to live would not attract much interest.

Lisa Rehburg: Yes, correct.

Eric Blake: Is there any general guidance on how much value someone might receive through a life settlement?

Lisa Rehburg: That is a tough one. The market generally looks for policies around $100,000 face value or higher, but nothing is set in stone. Every client and policy is different — even two universal life policies with the same face amount can be funded differently with different costs.

What I can say is that last year we generated about six and a half times the cash surrender value on average. Sometimes it is two times, sometimes much more — but about six and a half times on average.

Eric Blake: I know when it comes to insurance-related products there is always the potential for predatory sales practices — advertisements or getting connected to the wrong people. What are some red flags people should be aware of as they explore this option, and what can they do to make sure they are working with the right people?

Lisa Rehburg: First of all — research, research, research. Have conversations and trust your instincts. If someone is trying to pressure you into selling your policy, hang up. I am not here to talk anybody into selling their life insurance policy. If you and your financial advisor have already decided it does not make sense to keep the policy anymore, we are just here to get you more money.

Make sure people are licensed — ask for their license number. If you are getting high-pressure sales, walk away. This is a big decision and people should feel comfortable. Make sure all of your questions are answered and you receive all the information you need to understand the process.

Eric Blake: I want to take a quick moment to share a resource. Have you ever asked how much you can put into an IRA this year, or how much you can earn before Social Security gets reduced? Those answers change often. That is why we created a free two-page tax and retirement planning cheat sheet updated for 2026 with the key tax, Social Security, and retirement numbers all in one place. You can download it at simplyretirementpodcast.com/retirementcheatsheet. Now back to the episode.

Are there specific licenses, certifications, or organizations people should know about when exploring this?

Lisa Rehburg: Yes. Every state has either a Life Settlement Broker License or a Viatical Settlement Broker license. Sometimes it is just a registration, but most often it is an add-on to a life insurance license. There is also the Life Insurance Settlements Association at lisa.org.

Also make sure you know whose side someone is on. Brokers represent clients and try to obtain the highest value for the policy. Direct buyers do not have a fiduciary duty and try to buy policies as inexpensively as possible. Their motivations are different.

Eric Blake: In our practice we also spend a lot of time talking about taxes and reducing lifetime tax liability. What tax considerations should people understand when evaluating life settlements?

Lisa Rehburg: No one wants surprises. I am not a tax professional, but generally this acts like an asset sale. The premiums paid into the policy are your basis. If the settlement amount is below that basis, typically there is no tax. Amounts above basis are usually long-term capital gains, though a portion may be ordinary income depending on the policy.

Eric Blake: So coordinate with your life settlement specialist, financial advisor, and tax advisor before making a final decision.

Lisa Rehburg: Absolutely. Many clients first want to know what their policy might sell for, then they consult their tax professional before deciding. I have never had a client decline due to taxes because they are receiving more money, but it is still an important conversation.

Eric Blake: Many of our clients are women navigating divorce or widowhood. Suppose a woman in her late sixties or early seventies has her own policy after losing a spouse — what key issues should she consider?

Lisa Rehburg: My role is not to advise whether she should keep or sell the policy. That is a decision made with her professionals. By the time we talk, the decision to not keep the policy has usually already been made — beneficiaries were considered, affordability discussed, and other options explored. We are the last stop when the decision is to lapse or surrender the policy.

Eric Blake: Is there any restriction on how the money can be used?

Lisa Rehburg: No restrictions. Like selling a car or house — the money can be used for anything. We sell term policies all the time as well. Universal life is most common, but term policies are close behind and can provide money when someone would otherwise walk away with zero.

Eric Blake: We often talk about home equity as a major illiquid retirement asset. This sounds like another strategy to examine as part of retirement planning.

Lisa Rehburg: Exactly. We often see it used to help fund long-term care — assisted living, memory care, or home care — to make life more comfortable.

Eric Blake: For someone listening who wants to learn more, what is the first step — contact their advisor or contact you?

Lisa Rehburg: I would reach out to me first. Many advisors either do not know about this or cannot discuss it. We can review the policy and then involve the advisor. Both conversations are important.

Eric Blake: One of the most valuable things is knowing what questions to ask.

Lisa Rehburg: Exactly. Visibility and education are key — that is my passion.

Eric Blake: How can people contact you?

Lisa Rehburg: I am on LinkedIn. My website is rehburglifesettlements.com. My phone number is 714-349-7981 and my email is lisa@raysettlements.com.

Eric Blake: Thank you so much for joining. This has been an eye-opening conversation. If this strategy resonates with you and you are trying to decide what to do with an old life insurance policy, reach out to a professional and learn more. This is not about making a quick decision — it is about understanding your options before making a permanent one. Having the right information at the right time can make a huge difference in your next steps forward.

Again, thank you for joining me. Thank you to our listeners for tuning in. For links and resources mentioned, visit simplyretirementpodcast.com. Until next time, please remember — retirement is not the end of the road. It is the start of a new journey.

Content here is for illustrative purposes and general information only. It is not legal, tax, or individualized financial advice; nor is it a recommendation to buy, sell, or hold any specific security, or engage in any specific trading strategy.

All investing involves risk including loss of principal. Results will vary. Past performance is no indication of future results or success. Market conditions change continuously.

Information here is provided, in part, by third-party sources. These sources are generally deemed to be reliable; however, neither Blake Wealth Management nor RFG Advisory guarantee the accuracy of third-party sources. The views expressed here are those of Blake Wealth Management. They do not necessarily represent those of RFG Advisory, their employees, or their clients.

This commentary should not be regarded as a description of advisory services provided by Blake Wealth Management or RFG Advisory, or performance returns of any client. The views reflected in the commentary are subject to change at any time without notice.