Your Complete Guide To Life Settlements
More and more seniors are discovering the benefits of tapping the hidden value of their life insurance policy through a life settlement. A life settlement will free up the burdensome, ever increasing premiums, and provide an immediate source of funding that can be used however you most need.
About Life Settlements
Life settlements are an important financial planning tool that all seniors should consider. Your life insurance is personal property that can be sold like any other property you own. A life settlement is the sale of a life insurance policy to another person or entity that does not have a familial or business relationship with you. Sometimes this could also be referred to as a “transfer for value.” When selling your insurance policy in a life settlement or viatical settlement, you receive an amount greater than the cash surrender value (if there is any) of your insurance policy. Companies that provide life settlements work with you to help you understand the entire process and determine whether your life insurance policy specifically qualifies for a life settlement or viatical settlement. The value of the policy depends on many factors including the health of the insured, the type of policy and how long ago the policy was issued, as well as how the specific policy is structured.
A life settlement is the sale of an in-force life insurance policy on the secondary market to a third party, where the offer is greater than the cash surrender value of the policy but less than the net death benefit. The offer can be a lump sum cash payout to the policy owner, or the offer can be structured in our Senior Care Benefit Plan professionally administered to assist with long term care costs.
Viatical Life Settlements
Viatical Life Settlements are a transaction where a lump sum cash payment is made to the owner of a life insurance policy to purchase both the rights of ownership and beneficiary designation where the Insured has 24 months or less life expectancy and/or has a terminal illness (exact definition depends on specific state law).
Life Settlements can come in a few forms to benefit your unique needs.
Senior Care Life Settlements
Our Senior Care Life Settlement option is a benefit plan which helps seniors cover their monthly long term care costs, including home care provided by a family member, independent living, assisted living, memory care, and skilled nursing. The monthly payment is adjustable and follows the senior every step of the way through their care plan. Contact us now to learn more.
How Life Settlements Work
The buyer of the policy in a life settlement transaction takes overall future premium payments and becomes the new owner and beneficiary of your policy. That buyer may be an investor or institution which purchases life insurance policies through a licensed life settlement provider, or the provider may purchase the policy themselves. Once purchased, the new owner will continue paying the premiums and hold the policy to collect the net death benefit or resell the policy, individually or as part of a portfolio of life policies.
Life settlements are regulated at the state level, so be sure to check to make sure the life settlement provider or life settlement broker you are working with is licensed in your state. The state regulations provide the policy seller with important protections, including the right to rescind the transaction for a period of time, known as the rescission period (the specific time period varies by state) and privacy and data protection. During the closing, the provider establishes an escrow account with an independent financial institution that will hold your payment money and the ownership and beneficiary documents on behalf of your buyer. Once the escrow company determines that the ownership and beneficiary has been changed as detailed in the contracts, the purchase price will be paid to you or whoever you specify is to be paid. After that, you will have no need to make any premium payments as that will become the responsibility of the new owner.
Once the policy has been sold, the purchaser will have a financial interest in your life insurance policy and as such will periodically check in with you to make sure their records are up to date regarding contact information and health status.
Reasons to Choose A Life Settlement
Study after study portrays several misconceptions people have about their retirement years. Many believe that a nest egg can be built within a relatively short period of time, so they underestimate the amount of money needed to sustain their pre-retirement lifestyle after they retire. They imagine retiring at age 55 or 60 when the reality is that any people are working full or part-time into their 70s and beyond. If you are nearing retirement or are already there, it is time to take a hard look at your life insurance policy, which can be sold for cash to enhance an inevitable change in both living expenses and lifestyles.
Your current insurance policy may not be as suitable to your current situation as it was when you first bought it. The introduction of new and improved financial products now allows you to reevaluate your financial plan. A life settlement is one of the options many seniors are utilizing for their financial benefit to achieve a higher quality of life in the years to come.
You should look at life settlements as an option if you are a qualified senior who has a policy that is no longer wanted, needed, or affordable. Many policies lapse or are surrendered for minimal cash values, but with life settlements, policy owners receive substantially more in exchange for their existing policies.
Health and Family
Health challenges have increased medical expenses.
Family considerations, such as debt, become a concern.
Alternative funding is needed for more suitable financial products.
Trust evaluation is necessary as beneficiaries age or change.
A 1035 exchange is necessary for a new life insurance policy.
Forced liquidation requires a source of cash flow.
Liquidated policies donated to not-for-profits.
Investments in the insurance areno longer appropriate.
No matter your reason for choosing a life settlement, now is the time.
Assets need to be recovered from business-related insurance plan.
Company’s management changes.
“Key-man” insurance or other business-owned insurance are no longer needed.
Personal insurance and investment needs and/or goals have changed.
Charitable giving becomes an interest.
Loans need to be paid off.
Access to the value of your life insurance policy becomes a priority.
Policy is no longer needed or wanted.
Premium payments become unaffordable.
Estate, tax or financial plans, and laws change.
Policy performance does not meet expectations.
Frequently Asked Questions
What Are The Tax Considerations Of A Life Settlement?
While we cannot give tax advice, a life settlement can be can be tax-free in certain circumstances. You should consult with your accountant or tax advisor regarding the tax implications of your policy sale. Our Senior Care Benefit Plan is great for seniors who need to specifically pay for long term care needs and would like to protect future Medicaid and/or Veterans benefits eligibility, and in most cases is a tax-advantaged use of life settlement proceeds!
How Do I Find Properly Licensed Life Settlement Companies?
The best resource available for learning more about the life settlement industry and the companies licensed is the Life Insurance Settlement Association (LISA), the life settlement industry’s trade association. LISA has excellent resources for learning more about the industry surrounding this unique market, as well as the companies that are properly licensed. Here is a link to additional educational resources from LISA.
Why Do Providers of Life Settlements Buy Life Insurance Policies?
Life settlement investments are an attractive investment opportunity for institutional investors. These investments are not subject to typical market and economic cycles, and investors looking for alternative products have been flocking to this attractive option.
See If You Qualify Now
The easy process for calculating your life settlement.
The life settlement or viatical settlement calculator is a no-cost estimator that will ask for your policy size (death benefit), age, and health status. As soon as we have the information to value your life insurance policy, and receive your permission to contact your doctors and insurance company, we will call you with any offers that are made for your policy. You can then decide if the life settlement process is the right choice for you and your family.
After You Qualify
Next steps toward selling your life insurance policy.
- Speak with one of our experts and let us walk you through the process. Our experts have years of experience working directly with folks like you to get them the best settlement possible.
- Contact a life settlement provider or a viatical settlement provider (the name depends on your state of residence). Life settlements providers (or viatical settlement provider) are licensed by the appropriate state regulatory agency (typically, either the Insurance Department or Financial Service Department) to purchase life insurance policies from consumers.
- Contact a life settlements or viatical settlements broker. A life settlement broker is licensed by the appropriate state regulatory agency to represent consumers when they sell a life insurance policy. The life settlement broker will contact life settlement providers on your behalf to see if they are interested in purchasing your policy. When working with a life settlement broker you will have to pay the life settlement broker a commission for assisting you in the sales process. The fee is paid out of the sales proceeds, and no commission is paid if a life settlement is not completed.