MAKE
Newport Beach, CA
Leading Wealth Advisor
GR Capital Asset Management
Todd Rustman, CFP®, CFA®, CLU®, CWPP
Senior Wealth Manager
My needs have changed, and I want
to sell my life insurance. Should I?
By Todd Rustman
In a word, “wait!” Clients and their
advisors need to consider many
options before terminating a policy.
Life insurance, in 21st-century wealth
management, is an asset that should
be appraised like any other asset on
the balance sheets of individuals,
trusts and businesses. Just this year,
Washington state and Maine passed
laws requiring carriers to present the
life settlement option to insureds who
might be susceptible to cashing in or
terminating their policies.
Due to the longer mortality tables
instituted last year, and the appraisal
and analysis options available today,
those policies should be reevaluated.
Insurance policies should have a
checkup every five years to examine:
1. Change in estate tax needs (given
the 2008 drop in real estate, company
values and equity value, there might
be less need for insurance)
2. Change in estate tax exemption
amounts as well as estate tax rates
3. Change in family (marriage,
divorce, birth)
Given current estate tax exemption
amounts and asset devaluations,
many clients are overinsured or in
premium-financed (hopefully, carrier
approved) policies that have big bal-
loon payments coming due. The total
amount of insurance might no longer
be necessary.
The best advice is to “get advice”
on what you own. Simplicity is better
than complexity; understand and
Securities are offered through NEXT Financial Group Inc. Member FINRA/SIPC. GR Capital Asset Management is not an affiliate of
NEXT Financial Group. This material is not intended to replace the advice of a qualified tax or legal professional. Before making any financial
commitment, consult with your tax advisor or attorney.
make sure that what you have in
place is optimal.
Given the current credit markets
and risk appetite, institutional buyers
(only use institutional buyers) are
looking for policies that:
1. Are more than two years old (past
the incontestable period)
2. Have insureds over age 65 (70-
plus is better for pricing)
3. Have insureds with not too long
of a life expectancy
Example: A client had two term
polices worth $10 million, and, because
of lessened estate needs and tougher
economic times, the client was just
going to throw them away. Instead,
the client completed an appraisal and
analysis process and netted $1.2 mil-
lion for the policies and then used
that newfound money to expand his
retail clothing business into a catalog
and online venture—essentially sav-
ing the company that formerly had
only retail stores.
Many clients also had key-man
policies and trust-owned policies.
An analysis still must be done, and
even if it comes back with no better
options, there is paperwork in the file
for compliance with beneficiaries and
shareholders.
We expect that life insurance will
be seen as an asset class, and not an
expense, within advanced wealth
management. And, as with any asset
on a balance sheet, we should operate
with knowledge of its value.
ENSURING
INSURANCE SALES
Institutional buyers “reverse-
engineer” what price they are
willing to pay for life insurance
based on achieving a certain
rate of return. The devil is in the
details, but some best practices
would be:
Use only one broker.
Although it might seem good to
pit multiple brokers against
each other, there is a limited
number of buyers. The more
times that a funder sees a policy,
the lower the offer.
Transparency. Transparency.
Transparency. Make sure you
have a broker who lets you
know the gross and the net
price for your policy. We would
not sell a home without know-
ing the gross offer before the
selling expenses, would we?
Taxes. Recent tax rulings
mean you should consult with
your tax advisor (there are
experts in this area) about the
ramifications before accepting
an offer.
Capacity. When a policy is
sold, it should remain in force,
which does affect your ability
to get insurance in the future.
The institutional buyers will do
everything they can for their
shareholders to push the cost of
insurance down in order to pay
minimally and ensure funds are
there to get the policy to fruition.
How to reach Todd Rustman
I prefer face-to-face meetings with prospective clients.
Please feel free to call me at 800.805.7526.
GROW
“Everything should
be made as simple
as possible, but
LIVE
not simpler.”
– Albert Einstein
GR CAPITAL ASSET MANAGEMENT
W HAT ’ S O N M Y DE S K …
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M Y HO B BI ES A RE …
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About Todd Rustman
Todd Rustman, president of the GRCAM team, has more than 16 years of experience in providing wealth
management and MFO services. He has CFP, CFA, CLU, CSA and CWPP certifications, as well as his pilot
and real estate licenses. He is a co-founder of several companies, sits on the board of Gen-Next and is the
California representative for the Asset Protection Society. He has been named a Top Wealth Advisor nation-
ally with Worth in 2007 and 2008 and was named a 5-Star Wealth Manager by Crescendo Research for
2009 and 2010.
Compensation Method Asset-based, fixed and hourly fees; commissions
Confidential (investment and insurance products)
Assets Under Management
Primary Custodian for Investor Assets Pershing
None required
Minimum Fee for Initial Meeting
Professional Services Provided Planning, investment advisory, money
management and asset protection services; life settlements
$5 million
Minimum Net Worth Requirement
Association Memberships FPA, CFA Institute, National Association of
Insurance and Financial Advisors, California representative for the Asset
$500 million Protection Society
Largest Client Net Worth
16 years www.gr-cam.com trustman@gr-cam.com
Financial Services Experience Website Email
GR Capital Asset Management 660 Newport Center Drive, Suite 770, Newport Beach, CA 92660 800.805.7526
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