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What types of policies qualify for life settlements?

April 19, 2016
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Policyholders may at some point wish to sell their life insurance policy as their needs change or if they experience a dramatic life event. Or, perhaps the policy premiums have become too costly.

When an owner of a life insurance policy wishes to sell his or her policy in exchange for a lump sum of money on the secondary insurance market, this is known as a life settlement.

Several types of policies qualify for this conversion:

Universal life insurance policies

This type of policy combines permanent insurance coverage with more flexible and more affordable premiums. Universal life insurance policies accumulate cash value and this value increases as the policyholder pays its premiums.

Whole life insurance policies

Whole life insurance policies stay active for the policyholder’s lifetime, as long as the policyholder pays the premiums, or until the policy’s maturity date. Typically these premiums do not increase and are usually based on age.

Variable life insurance policies

This type of policy offers protection plus an investment portion as well. Variable life insurance has a cash value account, which is invested in a number of sub-accounts that accumulate value over time.

Term life insurance policies

This type of coverage provides life insurance benefits for a specified period and does not accumulate cash value. Once the policy expires, the owner must decide to renew or discontinue the policy.

Survivorship policies

This type of policy covers two individuals and is a variable insurance. After both individuals are deceased, the beneficiary receives the policy’s benefit.

Group life insurance policies

So long as group life insurance policies are able to be converted, this policy is eligible. Often, when workers exit a company, they are able to purchase these types of policies.

Restrictions

In considering these variables, it should be noted that any type of policy should have been in place for at least two years and cannot contain a clause restricting the transfer of the ownership rights of the policy. Obviously, each involved party must agree to the transfer before it can be completed.

If you or someone you know owns one of these policies and are interested in the life settlement option, contact us. We are happy to discuss with you the benefits of the life settlement option.

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Are there other policy options besides a life settlement?

April 12, 2016
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Some life insurance policies do offer other options besides a life settlement. Because of this, individuals should consult their financial advisor to see which option may offer the family the most benefit. Some policies offer loans, a cash surrender option, or even accelerated death benefits that may be worth exploring. As with any option you choose, there are risks and terms, advantages and disadvantages. So, speak with your financial advisor first.

Some of the options that life insurance policies offer may include:

Accelerated death benefits:

Some policies offer holders the option of obtaining a part of their policy’s death benefit while they are still living as part of the policy’s rider. Usually this option requires that a physician document that the policyholder has less than two years left to live, which is a consideration that policyholders must consider.

Premium payments- discontinuation or reduction:

Some policies include an option for discontinuing the payments of the policy’s premiums. If the holder’s policy has accumulated enough cash value over its duration, this may be an option.

Further some policies offer a waiver that allows holders to waive future premium payments.  In the event of a medical disability, the waiver allows the holder to either temporarily or permanently waive their premium payments.

Policy loans:

Some life insurance policies such as whole, universal, or variable life insurance policies, accumulate value. Often, this value may be borrowed against, much like a loan. Usually the policy’s interest rates are less than that of a bank’s. With this option, the amount of the loan and interested is deducted until the loan is repaid.

Cash surrender value:

Each life insurance policy has a cash surrender value, or CSV, which is the amount of money a life insurance company will pay the policy holder when he or she surrenders the policy either before its maturity date or before the policyholder’s death. The details as to how this amount is determined is contained within the policy.

Policy lapse:

In the event that a life insurance policyholder discontinues making payments on the policy, then, after a specified grace period, the policy is cancelled. The policyholder does not receive any accumulated cash value with this option.

 

1035 exchange:

Often, a policyholder’s needs change. Because of this, the Internal Revenue Service may allow the policyholder to replace an outdated existed insurance policy with a more appropriate one that meets current needs, which is known as a “1035 Exchange.” With this option, the policyholder does not incur any tax liabilities.

 

Because all of these options have different risks, terms, and exclusions, your financial advisor will discuss how each option affects your policy’s specific requirements.

 

If you or someone you care for would like more information about a life settlement, contact us.  

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Why choose a life settlement?

April 5, 2016
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Life settlements may be a wise choice for thousands of seniors who currently have unwanted or unneeded life insurance policies. Some of the reasons it may be a wise choice include that:

The policy becomes unneeded

As we age, life needs change. The original reason the policy was purchased may no longer apply to the individual. The loved ones that the policy intended to protect and provide for may now be financially independent and not require a policy benefit any longer. So, some individuals choose a life settlement for their current wants and needs.

To cover medical costs

Some choose a life settlement to pay for medical treatments and/or medical care as they age. The lump sum of money from a life settlement can help meet these needs, and there is no stipulation for the use of the funds of a life settlement.

The policy offers investment options

Some use the proceeds from a life settlement to purchase another asset, such as a home, business, or in other financial areas. Sellers are allowed to re-invest the proceeds from a life settlement into any other financial vehicle they wish.

Frees money

The money for premiums on a life insurance policy may be needed to pay for other costs, like health care or home care assistance. Some feel the life settlement is a great way to ease their family’s financial burden.

Be aware of your options

Sometimes, unfortunately, many seniors do not realize that selling an unwanted policy is even an option. They do not realize that investors are seeking policies as a wealth-building tool. Because they are unaware of their options, sometimes this may cause seniors to make financial decisions that are not in their best interests.

Policy lapse

Rather than losing the money paid into the policy for years by allowing the policy to lapse, some policyholders see a life settlement as a viable option as opposed to allowing the policy to lapse.

Surrender the policy

Some choose to surrender the policy back to the insurance company. This is an option, however, this often is not the most lucrative option. Usually the policyholder is paid pennies on the dollar for their life insurance policy.

More value from the policy

Many choose a life settlement because they view this option as the most valuable way to convert an asset into liquid money.

If you are interested in exploring your options with your unneeded life insurance policy, please contact us today

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Will my information remain confidential during a life settlement?

March 29, 2016
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We are a professional establishment that takes every measure to make sure each client’s personal information remains confidential. We are committed in every way to maintaining your privacy throughout the life settlement process. Unless required by law, a client’s medical and/or financial information will never be shared with a third party.

In addition, each client is protected by federal privacy laws, which cover the life settlement industry.

What do we share with other companies?

Our professional reputation is paramount. Therefore, we only work with other esteemed, reputable companies to negotiate the sale of your unwanted life insurance policy. The companies with which we partner remain as steadfast as we are in protecting the privacy of each client with whom they work.

As we are negotiating the sale of a life insurance policy, it may be necessary to shard some of the policy’s information, which may include personal health information, and in some cases, financial information.

Is a life settlement common?

Life settlements emerged in the 1980’s and became very popular in the 1990’s. Each decade has seen an increase in the number of life settlement transactions. In fact, the life settlement industry is predicted to reach $160 million in the next decade.

Why is this industry growing?

Financial experts are expressing growing interest in the life settlement industry as a means for diversifying their financial portfolios. As of 2006, money managers invested nearly 15 billion dollars in the life settlement industry, and this amount is expected to rise significantly in the coming years.

Another reason the industry is growing is because seniors view a life settlement as another financial option when dealing with an unwanted life insurance policy. Instead of simply allowing their policy to lapse or surrendering the policy back to the insurance company, many seniors now realize that a life settlement may be the most beneficial option. This good news is spreading.

Further, people are living longer. This increases the number of policies that are available for purchase and for sale in the secondary insurance market. And because the proceeds from a life settlement can be used for anything, many seniors find the life settlement option very appealing as they wish to enjoy and feel comfortable during their “Golden Years.”

As with the sale of any asset, always consult a financial advisor before making any financial decisions. They can help you determine your long-term financial goals and how to best meet them.

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What are the fees for a life settlement?

March 22, 2016
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Individuals who have an unwanted or unneeded life insurance policy typically call upon the expertise of a life settlement adviser. This licensed adviser handles the conversion of a life insurance policy into cash smoothly and works with the policyholder from beginning to end.

Further, this expert charges no upfront fees. Rather, he or she receives a predetermined percentage of the settlement after the conversion is complete.

Advantages of a broker

Handling of paperwork

Life settlement advisors handle all aspects of the paperwork of the life settlement process. Often, if policyholders attempt to complete this paperwork individually, the paperwork becomes so cumbersome they typically consult a life settlement advisor for assistance.

Familiarity with the market

Because life settlement advisors work daily in the secondary insurance market, they understand it better than the average person. They are familiar with the life insurance market’s policies and the process in general, something that only comes from working in the industry.

Competitive offers

Typically, a life settlement advisor is able to secure more offers for an unwanted life insurance policy. Because of this, the price for the policy is frequently more than if a policyholder contacted one buyer for one offer. Because of the advisor’s experience, he or she is able to “shop” the policy to many buyers.

Broker’s fees  

Broker’s fees do not come out of the policyholder’s pocket; rather, they are received as a portion of the life settlement proceeds. Because these experts are typically able to help the seller receiver better offers for the policy than they could get individually, many policyholders feel that life settlement advisors are worth the percentage paid to them upon completion of the transaction.

Determining the fee

A life settlement advisor’s fee is structured differently for each policy. Further, fees vary. This percentage may be a portion of the overall settlement amount, a percentage of the face value of the policy, or in some cases, it could be the life settlement amount less the cash surrender value (CSV) of the policy.

Regardless as to how the life settlement advisor’s fees are determined, the policyholder pays no upfront fees for the services a life settlement advisor provides. The advisor is only paid a set amount once the transaction is complete and the seller has obtained his or her money for the policy.

If you or someone you know has an unwanted life insurance policy, contact us. We offer a complimentary consultation that can answer many of your questions.

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Are there any tax implications or other aspects you should consider before selling my life insurance policy?

March 15, 2016
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Benefits of selling your policy

Selling an unwanted life insurance policy can offer the policyholders many benefits that other options may not. One benefit is that selling the policy may provide more funds than other alternatives, such as allowing the policy to lapse or surrendering the policy back to the insurance company for the cash surrender value (CS V).

Further, selling the unwanted policy frees up money that is put toward the premiums for the policy, which are sometimes expensive. Then, this money can be used for other expenses.

Questions to consider before selling a life insurance policy

Before selling any asset, a life insurance policy included, the owner must think about why they took out the policy in the first place. If you or your family is relying on the benefits of the policy, then think about keeping it. Further, you should consider if, if you do pass away, your family will need the benefits to make ends meet.

Life insurance policyholders must think long-term as well. Is the policy needed to provide for the future? After the policyholder has considered all of these issues, he or she should contact a financial advisor.

Tax Implications

In the discussion with a financial advisor or a tax attorney, consider the tax implications. Typically, the funds received from the sale of the life insurance policy over the basis in the policy is taxed to you just as regular income would be.  You and your team of experts can discuss the financial impact this might have.

Other considerations before selling your policy

Selling a life insurance policy often provides a convenient way to convert an asset into liquid money. As with selling any asset, consider how this affects your future financial plans. Such considerations may include:

  • The death benefit of the policy no longer applies to the original owner. Consider how this affects a financial future.
  • A licensed life settlement advisor can assist you through the entire life settlement process. This helps the policy sell smoothly and helps you feel better about receiving the best offer for your policy.

If you or someone you care for has an unwanted or unneeded life insurance policy, contact us. We offer a free evaluation of your life insurance policy and can also provide you with an overview of the life settlement process.

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Common Questions about Life Settlements

March 9, 2016
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What is a life settlement?

When an owner of a life insurance policy chooses to sell the policy in the secondary insurance market, this is known as a life settlement. This legal transaction allows the owner of the policy to obtain a lump sum of money for the policy now rather than waiting for the policy to mature.

Once the policy is transferred to the new owner, he or she becomes responsible for the premium payments of the policy and will then receive the future benefits of the policy.

 Why a life settlement?

A life settlement provides options for owners of a life insurance policy who no longer need the policy. Perhaps the owner has been diagnosed with a terminal illness or they experience some other drastic life change.

These policyholders may need the funds from the sale of the policy to obtain medical treatment, for healthcare, or to pay off debt.

The proceeds from a life settlement may be used for any purpose.

 What is a life settlement broker?

A life settlement broker guides policy owners through every part of the life settlement process. This expert works to evaluate the policy, market the policy, and completes all necessary paperwork to make the process run smoothly.

Why would someone choose to sell their life insurance policy?

Life insurance policy holders may choose to sell their policy just as anyone may choose to sell any asset they have. The life settlement option allows the policyholder options.

Rather than simply allowing the policy to lapse or surrendering the policy for a nominal fee, a life settlement allows policyholders a lump sum of money.

A life settlement is a quick way of securing this money now as opposed to waiting.

How long does the life settlement process take?

A life settlement typically takes between thirty and ninety days, depending on the complexity of the case and how quickly signed documents are returned. Some settlements may take as little as thirty days.

 What fees are required for a life settlement?

We only receive compensation if your policy is successfully converted. We charge no service or application fees or any other upfront fees.   

Will this company share my information?

We will never share your private information with any third parties without your written permission.

If you or someone you care for owns an unneeded or unwanted life insurance policy, contact us.

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Why sell your life insurance policy?

March 2, 2016
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For some, as they age, they no longer need the life insurance policy they took out years ago. Their life insurance policies may have already served their purpose of protecting their loved ones. Or their loved ones are old enough to support themselves financially and are no longer in need of the policy. For some, a life-altering diagnosis causes them to reassess the way they spend their money.

Options

A policyholder must consider what to do with the unwanted policy. Typically, people are aware of two options: one option is to surrender their policy back to the insurance company; the other is to allow the policy to lapse.

A third option

A third option that more policyholders are becoming aware of is selling the unwanted policy instead of allowing it to lapse or surrendering it. This option typically yields higher proceeds than the first two options.

What is a life settlement?

A life settlement is a simple way to convert an un-needed life insurance policy into cash by selling the policy on the secondary insurance market. This way, the initial owner of the policy gets a lump sum of money for their policy.

Why sell your life insurance policy?

Selling a life insurance policy rather than allowing it to lapse or surrendering it may result in more money.

This lump sum of money from a life settlement may be used for any purpose.

No More paying monthly premiums

Life insurance premiums can be expensive. Owners may need the policy premium money for other more pressing financial needs. Once a policy is sold, the new owner becomes responsible for the ongoing premiums.

Selling your policy is an investment decision

Some feel selling a life insurance policy is an investment decision. The money received may be worth more now than years from now when the policy matures.

What can the money from a sale of a life insurance policy be used for?

The money from the sale of a life insurance policy may be used for any purpose. Some choose to pay for medical expenses, others choose to pay off debt, put a loved one through college, or take a vacation of a lifetime.

What are the tax implications of selling a life insurance policy?

Before selling your life insurance policy, consult with your financial advisor and/or tax attorney to determine if this is the best decision for you and your family.

If you or someone you care for has an unneeded or unwanted life insurance policy, contact us. We offer a complimentary evaluation of your policy

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What is a life settlement advisor?

February 24, 2016
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A life settlement adviser guides individuals through the life settlement process. Much like a realtor in the real estate market, this expert is licensed and trained and specializes in the secondary insurance market.

An adviser helps to make the life settlement process streamlined and smooth so that the client receives his or her settlement quickly.

What does a life settlement adviser do?

Life settlement advisers help their clients sell their unwanted life insurance policies to investors looking to purchase these policies. An advisor makes these connections for their clients.

Life settlement advisers work in this secondary insurance market on a daily basis. Because of this, they have developed business contacts with a wide variety of investors.

Life settlement advisers work with an extensive network of investors. These include insurance agents and insurance brokers, financial advisors, accountants, estate lawyers, and other financial advisers.

Life settlement advisers are trained to market their clients’ life insurance policies to these investors.  This extensive marketing and a competitive bidding process helps clients receive the best offer for their unwanted life insurance policy.

These established connections and our extensive experience and knowledge in the life settlement industry allows us to help clients get the most money for the conversion of their life insurance policies.

How does a life settlement adviser get paid?  

Life settlement advisers do not receive compensation unless your policy is successfully sold and receive no money until the process is complete.

Once the settlement is complete, and the policy successfully transferred, the adviser receives a percentage of the final settlement price for his or her work in underwriting, evaluating, marketing, and converting the life insurance policy into cash.

What are the steps of a life settlement?

The life settlement process begins by evaluating your policy. We will ask you brief questions about your life insurance policy and then give you an honest evaluation of the policy.  This will help you make an informed decision about your next steps.

Once you decide that a life settlement is the best choice for you and your family, our life settlement adviser will guide you through each step of the conversion process.

We are dedicated to being completely honest and transparent throughout the entire process of converting your unwanted life insurance policy into cash.

What are the next steps if I am interested in selling my life insurance policy?

If you or someone you know is interested in converting their life insurance policy into cash, contact us. We have a transparent, streamlined process for this conversion and are happy to help you and your family.

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Life Settlements

February 24, 2016
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What is a life settlement?

A life insurance policy is an asset that can be sold on the secondary insurance market. When the owner of a life insurance policy sells his or her policy to another individual for a sum of money, this is known as a life settlement. In exchange, the buyer of the policy takes over premium payments and also receives all future benefits from the policy when the policy expires.

 Why choose a life settlement?

Individuals who no longer need or want their life insurance policies may choose a life settlement as a way of obtaining money while they are still living.

In addition, those who are suffering from a debilitating disease may wish to sell their policy to have adequate funds for medical treatments or medical bills, or they may simply wish to live a more comfortable life.

A life settlement is a way to obtain this money to meet financial needs.

 What is a life or settlement broker?

A life settlement broker is a licensed professional who markets and sells life insurance policies on the secondary insurance market.

This expert works with clients wishing to sell their policies and works to evaluate the policy, market the policy to a wide network of buyers, and transfer the policy to a buyer once an offer has been accepted.

Why would someone choose to sell their life insurance policy?

The money the owner receives from the sale of a life insurance policy can be used for any purpose. Knowing this results in many owners choosing to sell a policy they no longer need.

When a family’s needs change, a life settlement is a smart way to liquefy an asset to meet immediate financial needs. The owner can obtain the money from the policy now rather than waiting for it to mature.

 What is the time period for the life settlement process?

This period of time varies depending on the policy. For some policyholders, the process may take as little as thirty days; for some, it may take three months.

The complexity of the transaction and the amount of paperwork it requires may cause this difference in time for the transaction process.

 What are the fees for a life settlement or settlemen t?

Life settlement companies typically only receive money once the entire process is complete. Because this is a paid commission, our company charges no upfront fees for our services.

Will this life settlement company share my personal information?

No, we pledge to keep your personal information secure and will never share it without your permission.

If you or someone you care for has an unneeded or unwanted life insurance policy, contact us.   

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