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Introduction - Prior to the establishment of the life settlement industry, if a person owned a life insurance policy that was no longer wanted, needed or affordable, there was no option but to lapse, cancel or give the policy back to the carrier for the cash surrender value. Now, if a life insurance policy becomes too expensive, is not performing up to the expectations of the policyholder or the original need for the policy no longer exists, a policyholder (over the age of 65) can sell it and if qualified.
Why Sell A Life Insurance Policy?
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People who just want (for any reason), need, or plan to need, the immediate cash benefits of a life insurance policy before they die should consider selling their life insurance policy by way of a life settlement.
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Life settlements can be real saviors for people whose life insurance policies will expire if the status quo is maintained, and who are unwilling to put additional cash into the policy to keep it alive.
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For estate tax planning reasons it may no longer make sense for the life insurance policy to pay out as planned, such as that the estate no longer needs insurance for liquidity - a life settlement may be the answer.
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Individuals may want to donate a policy to a charity and experience what the gift made possible - during their lifetime.
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A company's key executive could retire, thus ending the company's need to maintain insurance on his life.
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A business could fail, be dissolved, or go public, thus eliminating the need for Buy-Sell Arrangement backed with life insurance.
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An individual policy is being replaced with survivorship insurance.
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A better insurance or financial product for particular circumstances has become available, but for whatever reason the existing policy cannot efficiently be rolled into it.
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The owners want the cash now.
Nearly all life insurance policies will qualify for life settlements, including term, universal life, variable life, and whole life policies - even group life policies can be settled.
Why use LifeSettlementofAmerica.com? We are an advanced trusted on-line service dedicated to assist professionals efficiently evaluate if life insurance policies may be eligible to receive a Life Settlement. Team members are carefully chosen and selected. The program provides a high speed network of specialists who work as a team - across the USA.
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There is no medical examination required.
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Only one application is required to receive multiple offers from the top funding sources in the industry!
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There are never any fees to apply and there is no obligation to accept an offer from any of the funding sources.
There is increased awareness and acceptance of Life Settlements among CPAs, estate planning attorneys, and other professional advisors. Financial professionals have begun to recommend looking into this financial service, enabling more and more policy owners to access the unrealized equity built up inside an asset that is normally considered only as a future benefit. By informing their clients about life insurance settlements, they can help them turn a policy on the verge of cancellation, surrender or lapse, into an immediate cash settlement.
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Consumers Tap into New Life Settlements: According to a recent Wall Street Journal article (2004) the sale of life insurance policies has become a new investment phenomenon. It is attracting the attention of people over 65 .. a life insurance policy has more value than they may realize. .. The article, titled, Selling Your Life Insurance to a Stranger, describes how many life insurance policyholders feel the value of the policy does not justify what can be a formidable cost to maintain them. .. Yet these policyholders don?t want to let their policies lapse and receive nothing after investing thousands of dollars in them. Life Insurance Settlements allow a policy owner to sell an existing policy to a financial institution in exchange for an immediate lump sum cash settlement.
What is "insurable net worth"? It refers to the maximum allowable amount of life insurance for which an individual is eligible. A standard benchmark is that an individual over the age of 65 is eligible for life insurance in an amount approximately equal to his or her total net worth minus any current life insurance in force.
Who buys the life insurance policy and for how much? The life settlement process allows policy sellers to transfer their policies to a buyer who is then named as the beneficiary. The buyer pays the seller a percentage of the policy?s face value and continues to pay the premiums until the seller dies, at which point the buyer collects on the policy. The amount paid by the buyer is based on the age and medical condition of the seller and the face value of the policy.
What is the difference between a Life Settlement and a Viatical? Although very similar, life settlements are not the same as viatical settlements, which typically involve the sale of a life insurance contract for somebody who is terminally ill. Typically, viatical settlements are made when the person on whose life the policy is on has some sort of terminal illness, and a life expectancy of less than two years. If that persons life expectancy is greater than two years, then a life settlement is made instead.
What is the downside? If the total amount of life insurance issued equals the insured's insurable net worth, the individual may be unable to obtain additional life insurance coverage. If an existing policy is sold in a life settlement the individual listed on the policy is still considered the insured. If the insured's insurable net worth increases, additional life insurance may be available. Funds received may be subject to taxes and asset protection issues. Everyone must review these issues with their advisors..
Is there any cost or new medical examination? There is no charge or obligation and there is no medical examination required.
Examples: SEE CASE STUDIES
What if some insurance is still needed? In some cases where insurance is still needed by the client, they may be able to split the policy or they may use the life settlement proceeds towards replacement of new insurance, when appropriate.
Tax Implications - The tax treatment of life settlements and viaticals often depends on how the sale was structured. It is critical that the policy owner works with and consults licensed and highly experienced professionals to determine the tax effects prior to completing a transaction.
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Charity - An individual can take advantage of their existing policy?s value for charitable donations. By giving a policy to a philanthropic organization, that charity can in turn immediately sell the policy for a lump sum of cash through a Life Settlement. That provides the donor with the ability to:
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Make a donation to his/her favorite philanthropic organization without depleting cash reserves or losing income-producing assets;
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Get a tax deduction for the fair market value (selling price) of the life insurance policy instead of only the cash surrender value;
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Be able to see their donation put to use during their lifetime rather than after their death if the organization did not utilize a Life Settlement;
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Eliminate the requirement of continued premium payments on the policy;
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Remove a taxable asset from their estate if the policy was individually held.
Virtually any policy type may qualify for a Life Settlement, including Term, Whole, Universal, Survivorship, Adjustable, Variable, or Second to Die policies.
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*This information is for educational purposes only and does not constitute an application, advertisement or offer to sell and is not intended as legal, appraisal, accounting, financial, insurance, real estate or tax advice. **Products and features are not available in all states and may be changed at any time. Everyone should consult with their own professional advisors prior to entering into any transaction. Contact info@lifesettlementofamerica.com Back To Home
