Life Insurance Settlements
What is a Life Insurance Settlement?
Life Insurance Settlements allow a life insurance policy owner to sell an existing policy to a financial institution, called a provider, in exchange for a lump sum cash settlement. The amount paid for the policy is a discounted percentage of the policy's net death benefit and represents the present day value of the policy. This purchase price is determined by considering the insured's estimated mortality (life expectancy) and the associated cost of premiums to keep the policy in force for that timeframe.
There are two (2) types of life insurance settlement transactions:
1. Life Settlements create immediate liquidity from a non-performing asset, allowing policy owners to cash out of unwanted, unaffordable or obsolete life insurance policies insuring a senior generally over age sixty five (65).
Whether you call it a Senior Settlement, Lifetime Settlement, or High Net Worth Transaction, Life Settlements have become a very important factor in the estate planning process for seniors. Prior to the Life Settlement Industry, if a senior owned a policy that was no longer wanted, needed or affordable, there was no option but to lapse, cancel, or surrender the policy back to the carrier for the cash surrender value. Life Settlements allow qualified policy owners to liquidate a policy for an amount much higher than the cash surrender value. Then, these seniors can take advantage of important financial opportunities using the proceeds of an unwanted, unaffordable or obsolete life insurance policy.
Today, with the advancement of Life Settlements as a mainstream financial product, life insurance companies now face competition for the surrendered policies that they once monopolized. The Life Settlement Industry has created a competitive secondary market for life insurance policies. Consumers are now in the driver's seat, free to sell their policies in an open market for the highest available price, well above the cash surrender value offered by insurance companies.
Benefits to policy owners
* Relief of monthly premium expenses
* Additional funds to supplement retirement income
* Higher cash payout than the cash surrender value
* Funds to seek treatments not covered by health insurance
* Generate profit from a non-performing & often worthless asset
* Alternative funding for LTC policies, annuities or other investments
2. Viatical Settlements someone facing a terminal illness to utilize the present day value of his or her life insurance policy to ease the financial burdens that can be caused by the high costs of medical care.
Viatical Settlements
"People with limited life expectancies often face significant financial difficulties brought on by the rising medical costs and loss of income. Viatical Settlements enable them to sell their life insurance policy and use the proceeds to preserve their financial security."
- Trusts & Estates
Individuals have been selling or trading their ownership of life insurance policies since the very beginning of the insurance industry. This, however, was a relatively unknown practice until the AIDS epidemic heightened in the late 1980's. As insured's stricken with the disease learned that there was a living value to life insurance, the Viatical Settlement Industry was born.
After a decade of industry growth, legislation and regulation, viaticals have become an important financial option to many terminally-ill individuals. By selling a policy, many of these policy owners can ease the financial burdens brought on by increased medical costs and compensate for a loss of income due to illness.
Benefits to policy owners/insureds
* Relief of monthly premium expenses.
* Settlement income may Be tax-free.
* Immediate cash to ease financial burdens.
* Additional money to compensate for loss of income.
* Funds to seek treatments not covered by health insurance.
* Funds to pay off debts now, instead of burdening family members in the future.
Life Insurance Settlements allow a life insurance policy owner to sell an existing policy to a financial institution, called a provider, in exchange for a lump sum cash settlement. The amount paid for the policy is a discounted percentage of the policy's net death benefit and represents the present day value of the policy. This purchase price is determined by considering the insured's estimated mortality (life expectancy) and the associated cost of premiums to keep the policy in force for that timeframe.
There are two (2) types of life insurance settlement transactions:
1. Life Settlements create immediate liquidity from a non-performing asset, allowing policy owners to cash out of unwanted, unaffordable or obsolete life insurance policies insuring a senior generally over age sixty five (65).
Whether you call it a Senior Settlement, Lifetime Settlement, or High Net Worth Transaction, Life Settlements have become a very important factor in the estate planning process for seniors. Prior to the Life Settlement Industry, if a senior owned a policy that was no longer wanted, needed or affordable, there was no option but to lapse, cancel, or surrender the policy back to the carrier for the cash surrender value. Life Settlements allow qualified policy owners to liquidate a policy for an amount much higher than the cash surrender value. Then, these seniors can take advantage of important financial opportunities using the proceeds of an unwanted, unaffordable or obsolete life insurance policy.
Today, with the advancement of Life Settlements as a mainstream financial product, life insurance companies now face competition for the surrendered policies that they once monopolized. The Life Settlement Industry has created a competitive secondary market for life insurance policies. Consumers are now in the driver's seat, free to sell their policies in an open market for the highest available price, well above the cash surrender value offered by insurance companies.
Benefits to policy owners
* Relief of monthly premium expenses
* Additional funds to supplement retirement income
* Higher cash payout than the cash surrender value
* Funds to seek treatments not covered by health insurance
* Generate profit from a non-performing & often worthless asset
* Alternative funding for LTC policies, annuities or other investments
2. Viatical Settlements someone facing a terminal illness to utilize the present day value of his or her life insurance policy to ease the financial burdens that can be caused by the high costs of medical care.
Viatical Settlements
"People with limited life expectancies often face significant financial difficulties brought on by the rising medical costs and loss of income. Viatical Settlements enable them to sell their life insurance policy and use the proceeds to preserve their financial security."
- Trusts & Estates
Individuals have been selling or trading their ownership of life insurance policies since the very beginning of the insurance industry. This, however, was a relatively unknown practice until the AIDS epidemic heightened in the late 1980's. As insured's stricken with the disease learned that there was a living value to life insurance, the Viatical Settlement Industry was born.
After a decade of industry growth, legislation and regulation, viaticals have become an important financial option to many terminally-ill individuals. By selling a policy, many of these policy owners can ease the financial burdens brought on by increased medical costs and compensate for a loss of income due to illness.
Benefits to policy owners/insureds
* Relief of monthly premium expenses.
* Settlement income may Be tax-free.
* Immediate cash to ease financial burdens.
* Additional money to compensate for loss of income.
* Funds to seek treatments not covered by health insurance.
* Funds to pay off debts now, instead of burdening family members in the future.
posted by David Coleman at
3:45 AM
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