Life Insurance Valuation, a Key Component to Financial Planning Why is it important to know the Fair Market Value of a life insurance policy? Just as knowing the fair market value of real estate, investments, and other hard assets enables informed decision making. Knowing the fair market value for your life insurance policy will help you to make informed decisions regarding insurance coverage, and financial holdings, which may create more beneficial options. The difference between surrender value and Fair Market Value An industry study conducted, in 2002, at the University of Pennsylvania’s Wharton Business School found that life insurance policies sold in the secondary market for an average of 3.6 times the policy’s (cash) surrender value. There may be a significant difference between cash surrender value and fair market value. It is financially prudent to determine the fair market value for all assets including a life insurance policy on a periodic basis. Let us perform a no obligation, no cost life insurance valuation on your policy today. The fair market value is often higher than the cash surrender value. In the past, there was only one way to measure policy value, the surrender value dictated by the policy carrier. This cash value reflected neither the amount of premiums paid into the policy nor the fair market value that other institutions might be willing to pay for that policy. The result, (cash) surrender value of a policy is often lower than the fair market value. Many people have no idea what the true value of their life insurance policy is and still consider the (cash) surrender value as the true value of this asset. Life insurance gains in value. All this has changed. In the recent past a secondary insurance market has evolved. Banks, mutual funds, and institutional funding companies have seen the value and stability of entering into the secondary life insurance market. A current article, titled “The Benefit of a Secondary Market for Life Insurance,” appearing in the Real Property, Probate & Trust Journal of the American Bar Association, concludes that the secondary market for life insurance is both pro-competitive and pro-consumer.     © Copyright 2008 All Rights Reserved 6996 Piazza Grande Avenue, Suite 305 . Orlando, Florida 32835 . 800-974-5152 . Fax 407-386-7263 Life Settlements are regulated by Department of Insurance in each State and are not available in all States. First Financial Resources not licensed in all States.