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Life Settlements                  Life Settlements - Request For Quote

 

FREQUENTLY ASKED QUESTIONS
You may scroll through all the answers below or you may click on
any individual question and go directly to its answer

  1. Why do people sell their life insurance policies?
  2. Who buys life insurance policies?
  3. What are the criteria for buying a policy?
  4. What types of policies qualify?
  5. Who can own the Policy?
  6. How much can I get?
  7. Who makes the remaining premium payments?
  8. What information will I have to provide?
  9. How long does it take to complete the transaction?
  10. What if I change my mind?
  11. What are the advantages of selling my policy?
  12. What are the disadvantages of selling my policy?
  13. Are there any tax consequences to selling my policy?

ANSWERS TO QUESTIONS

  1. Why do people sell their life insurance policies?
    Life settlements are not for everyone, but should be considered if you are over the age of 70 (or younger with significant health challenges) and are considering surrendering your life insurance policy for its cash value or letting your life insurance policy lapse by discontinuing your premium payments.

    Additonal uses that life settlements have been used for include:
    • A financial alternative to a 1035 exchange
    • Eliminate or replace underperforming existing policies
    • Fund a single premium Annuity/Life Policy
    • Fund long term care and assisted living alternatives
    • Create more comfortable retirement years
    • Settle personal or business debts
    • Bestow cash gifts to family members or charities
    • Reduce or eliminate life insurance premiums that had become unaffordable
    • Maintain a lifestyle despite changes in finances or health

  2. Who buys life insurance policies?
    Investors, primarily private companies, buy the life insurance policies at a discount and then collect the full face value benefits when the policy holder dies.
  3. What are the criteria for buying a policy?
    Each company has its own set of criteria for which policies they are willing to purchase, and whether there are any conditions that must be met. They often have rules about the type of policies they will purchase or the insurance companies they will deal with. However, typically to sell a policy you will be required to meet the following guidelines:
    1. Have owned the policy for at least two years.
    2. Have permission from the owners or beneficiaries of the policy.
    3. Be over the age of 70 or have significant health problems
      (Terminally ill can qualify at any age)
    4. Policy coverage must be $100,000 or more
  4. What types of policies qualify?
    Almost any type of policy can qualify. Following are some of the most common:
    • Term with conversion rights
    • Universal Life
    • Whole Life
    • Survivorship
    • Key-Man
  5. Who can own the Policy?
    Ownership can be in any of the following:
    • Individual
    • Trust
    • Corporation
    • Group
    • Charitable Organization
  6. How much can I get?
    There are many factors that determine the amount you will receive and every transaction is different. We will obtain competing bids and the quote you will receive will be from the highest bidder. The primary factors affecting value are:
    • Age
    • Health
    • Premiums
    • Type of Policy
    • Insurance Company Rating
    • Policy Size
  7. Who makes the remaining premium payments?
    The investor who purchases you life insurance policy will be responsible for the payment of all future payments.
  8. What information will I have to provide?
    It is really a two step process. The first step is to determine if it is likely that you will qualify. That can be determined by filling out a simple questionaire online ( Click Here) or you can call (800) 480-3928.

    To initiate the actual appraisal process, you will have to provide the following:
    • An Application with some basic information
    • Copy of your Life Insurance Policy
    • Copy of Drivers License and SSN
    • In-Force Illustration to Maturity for your Policy
    • Attending Physician Statements from the last 3-5 years (if possible--the more thorough these statements the quicker the process will be completed)
  9. How long does it take to complete the transaction?
    This will depend in large part on how long it takes to collect the information from you (See Question #8). However, once the information is collected it typically takes 4-6 weeks to review the information and get an offer to you from the highest bidding investor.

    Following your acceptance of the offer the following will occur:
    • You will receive written confirmation of the offer with contracts that you and your beneficiaries must sign.
    • Typically takes 2 weeks for your insurance company to process and record the change of beneficiary forms.
    • Following that it typically takes a week for escrow to check all documents and release your cash.
  10. What if I change my mind?
    Every Life Settlement transaction has a 15 day rescission period. As the previous policy owner, you can change your mind and get the policy transferred back to you within fifteen days after receiving your funds. Obviously, you will also have to return the funds you received.
  11. What are the advantages of selling my policy?
    1. You will receive a lump sum cash payment for your policy now.
    2. You can do whatever you want with the money.
    3. You won't have to pay any more life insurance premiums.
    4. For qualified policies, you will receive more than the current cash surrender value of the policy.
    5. You won't have to pay the money back like if you borrowed against your life insurance policy.
    6. In some cases, the money you receive is tax free.
  12. What are the disadvantages of selling my policy?
    1. You might lose your eligibility for some public assistance programs. This would most likely happen for benefits that are based on your income and assets, such as food stamps, Medicaid, welfare, and some Social Security benefits.
    2. Your life insurance benefits won't be available when you die. If you wanted money to go to certain people or organizations, you would have to make gifts from the money you get for selling your policy.
    3. People might learn about your health status when you sell your policy
  13. Are there any tax consequences to selling my policy?
    As with any significant financial decision you should consult a professional tax advisor. Having said that, the general rules considering taxability seem to be:
    • Tax Free up to the Amount Invested (Premiums Payments)
    • Then, ordinary income up to cash surrender value
    • Then, capital gains above cash surrender value

 
   
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