Planning for an uninsurable 37 year old

I have a client who is a 37 yo male, 2 young children (2 & 4), and has a terminal liver disease(Walter Payton disease) with a life expectancy of another 10-15 years. He doesnt have any major life insurance coverage (50k), but has a retirement program with about 100k in it, and owns a home worth about 600k in this market, with a debt of 260k. He wants to not rely on outside family for planning purposes.


What are some options I should look into for him and his family?

I am looking into a 2nd to die policy on him and his mother in law (68 years old) as one option, as well as premium financing to help with bringing down premiums. For a 1 million DB UL policy with 20 year guarantees it cost around 10k. I have never done any planning with premium financing previously, but wondering if anyone has any experience in doing so, and if so, what are the benefits and what are the risks. Also, would it be a viable and prudent thing to possibly use equity in the mortgage to help pay premiums on the life insurance policy. I would rather he didnt, but came up as a question.

Any other creative ideas out there to help create a fund to replace a six figure income and provide for the needs of a young family? From what I can see, using life insurance in this instance is the ideal option to create an immediate sum of cash to the family upon both members dying, but the downside is that we are waiting on 2 people, not just one.

Lastly, how does selling a life policy work to an investor? Would this be a viable option if there is a need to get money sooner than waiting for death from one or both of the insureds? Would this be the same thing as using a viatacle settlement company?

Thanks for any and all of your help.

this guy has no term insurance he can convert (assuming carrying the term doesnt get him to projected mortality)?

additionally, you said he had 50K in insurance. does he have a policy purchase option wherein he can add to the policy every few years without showing evidence of insurability?

i also find it difficult to believe that he can get ANY life coverage at all with a projected mortality of 10-15 years. using his mother in law (at age 68) may get some coverage, but geesh ... its gonna be crushing expensive since both have about the same time to live.

obviously the best time to get this guy hooked up was before he got WP disease. you can ensure his kids are better taken care of by making sure the mom is covered to at least some degree.

listen, IOLI is certainly not a way to go. it does very little for him and frankly ... it is immoral to have some investors benefit from this guys premature passing. i honestly dont think an insurance company will buy off on it anyway.

what can this guy do? hell, other than working his everloving ass off and trying to sock as much of it away as possible, i have no general comments. that said, be sure to really look into leveraging his employer benefits across the spectrum. full disability, long term care, health, and of course his group term. he may consider looking around for another employer who offers better benefits.

let us know what you decide.

Wow, that's very sad.

I'm no insurance expert, but I agree with 1MO.

The general purpose of life insurance is to replace his income for a certain period of time, and/or to take care of debts so that his survivors can go on without him. I suggest that he spend his remaining years doing just that -- socking away money, paying down debt, and otherwise preparing his family, financially, for living without him. Perhaps within six or 8 years they should be in such a position that they are living on one paycheck, perhaps using the other to save for the children's college or paying for pre-paid burial expenses. But I would suggest that paying off the home and preparing for his final expenses (including, perhaps, unreimbursed medical expenses) be the family's priority.

His term policies are provided by his employer, but we need to check into the ability to convert or buy more. I am not sure if he is participating in LTC, but is definitely a good idea. He does have DI, but also is a group policy.

From what I was told, we can get him a Joint Life policy as an uninsured, but final premiums would have to be determined after underwriting. Unfortunately, sounds like there are not a lot of options for him, but I thought the best bet would be a 2nd to die policy that is funded by him out of pocket. Further more, I was under the impression that an investor owned LI, IOLI, would be a viable alternative to give him immediate cash flow if there was an unforseen need. I understand the ethical dilemna it posesses, but not sure why it would ALWAYs be a bad thing.