What Is A Life Settlement
A life settlement is a transaction where a life insurance policy holder sells their life insurance policy to a third party for more than the cash surrender value, but less than the policys death benefit. The original owner receives a cash payment in the amount of the life settlement offer, and the new owner pays all of the life insurance premiums moving forward.
Life settlement companies work with you to help you understand the entire life settlement process and determine whether your life insurance policy qualifies for a life settlement or viatical settlement. Life settlement companies life settlement brokers and providers help you cash out your policy and make life settlements work for you.
After a policyholder sells a life insurance policy in a life settlement transaction, the policyholder is no longer responsible for life insurance premium payments. In addition, the policys beneficiaries and your loved ones will no longer receive the death benefit when the policy payout is made. You can use the cash payment received however you see fit, whether that is to supplement your retirement income, pay off medical bills, or cover long-term care costs.
Cfo & Operations Manager
I assist in closing process working with agents and/or clients providing support in life settlement transactions along with communicating and coordinating with Providers to comply with satisfying completion and due diligence on documents submitted to ensure we settle policy expediently and professionally. Other duties include bookkeeping, payroll, compliance, licensing, and other administrative functions of day to day operations.
Licensed as Life agent and Viatical/Life Settlement Broker in most states.
We Didnt Think Had Any Value Because It Was A Term Policy So To Get Some Financial Benefit From It Was Pretty Remarkable
Brad purchased a term insurance policy to provide income protection for his wife Teresa. As they were approaching retirement and reevaluating their investments, they were considering letting the policy lapse to reduce expensesnot realizing that their policy was an asset that could be sold for cash.
With the proceeds provided by Coventry, Brad and Teresa were able to retire earlier than they had originally planned. With this newfound time and money, they have also been able to pay down some debts, travel, volunteer and spend more time with their grandchildren.
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I Sold My Term Policy And Received $59200 For A Policy That Otherwise Had No Value
James purchased a term life insurance policy for estate planning needs and income protection. Due to changes in his estate, he no longer needed the same level of coverage and didnt want to pay the ongoing premiums. James was going to let his policy go when he learned he was able to sell it, even though it was a term policy with no cash value. He received $59,200 for a policy where he would have otherwise received nothing.
The Different Types Of Term Policies You Can Buy
As you shop around and start talking to companies or insurance agents you may hear about different kinds of term policies. They all provide a specific benefit over a specific term but may have very different bells and whistles and costs.
One more thing to look for in a term policy: Convertibility
Convertibility is a policy provision that lets you change your term insurance into a permanent whole life policy later on without having to get a new medical exam. Its a feature offered by almost all major insurance companies that let you change your type of life insurance. Guardian, for example, lets you convert level term insurance coverage at any point in the first five years to a permanent life policy and even offers an optional Extended Conversion Rider which lets you do so for the duration of the policy. 2
Why would you convert to a whole life policy from term? If youve had a serious health problem for example, a heart attack it may be very difficult to get another policy. Another reason: youre attracted to the cash value component of a whole life policy. Or maybe you want permanent life-long coverage. A term policy may well be your best choice now, but things can change.
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Are You Saving Enough To Retire
Start by getting a realistic idea of where you stand today.
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Can You Sell Your Life Insurance Policy
Yes, you can sell your life insurance policy by obtaining a life settlement. The process of obtaining a life settlement involves selling a life insurance policy to a third-party buyer for a cash payout that is more than the policys cash surrender value but less than the total face value of the policy.
Another type of settlement that follows a very similar process is known as a viatical settlement. While similar to a life settlement, a viatical settlement is the process of selling a life insurance policy to a third-party buyer where the insured has a chronic or terminal illness.
While the viatical settlement process is mostly the same as a life settlement, the tax implications and state regulations differ drastically.
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You Can No Longer Afford Premium Payments
Depending on the terms of your policy, changes in the insurance market or poor policy performance could drive up the price of the premiums that you pay. Or, you may have experienced an unexpected financial issuelike increased medical expenses, legal issues, assisted living costs, or tax issues. With a life settlement, you can eliminate all future premium payments.
Thinking About Selling A Term Life Insurance Policy
When you first got a life insurance policy, its unlikely you were imagining how it would play out in a life settlement. You probably didnt know you could eventually sell a life insurance policy.
Now that youre looking into it, you may have found you have a term life insurance policy. This is different from a whole life insurance policy or a permanent policy. However, you can still get a life settlement from selling a term life insurance policy. You just need to convert it first.
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Term Insurance Frequently Asked Questions
Who can sell their term life insurance policy?
All Life Settlement cases depend on the specifics of health, age, policy type and face amount, and gender. American Life Settlements has 3 Policy Sale Programs for Insureds who might live up to 23 more years, and 3 for those with a lifespan of 5 years or less. Convertible term policies are easier to sell than all other forms of life insurance. See our list of programs to find out the various options for selling your term insurance policy.
When should a convertible term policy be submitted for Life Settlement quotes?
A convertible term policy may be submitted for Life Settlement quotes at any time, ideally at least 12 months before the policy loses convertibility. Policy Owners should call the life insurance company if unsure when the policy can no longer be converted.
What are all of the Term insurance Life Settlement options?
If convertible, most Term life insurance policies may be sold for lump-sum of cash as a Life Settlement if the Insured may live up to 23 more years, or as a tax-free Viatical Settlement if the Insured will probably live 2 years or less per medical certification.
Convertible Term insurance may also be sold for a Retained Benefit Life Settlement which gives the option of getting some cash now and leaving some benefit later.
The Long-Term Care Life Settlement is another use for Convertible Term insurance by those receiving licensed Long-Term Care or needing some in 90 days.
Does Term Life Insurance expire?
Q: What Happens If I Stop Paying My Term Life Insurance
A: The policy will lapse if you stop paying term life insurance premiums, and you will no longer be insured. This means that if you were to die after your policy lapsed, your family would not receive any death benefit from the policy. As a result, its important to ensure that you keep up with your term life insurance payments to keep your coverage in force.
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When Would I Get Paid
You would get paid as soon as the necessary documents have been signed and the insurance company confirms that the owner and the beneficiary on the policy have been changed. Its important to note that when you sell your life insurance policy you forfeit any money that would normally be paid when you die.
Q: Can I Cancel My Term Life Insurance At Any Time
A: Term life insurance is a type of insurance that provides coverage for a set period, typically 10, 20, or 30 years. After the term expires, the policyholder can either renew the policy for another term or cancel it. Most term life insurance policies have a clause that allows the policyholder to cancel the policy at any time without penalty.
When deciding whether to cancel a term life insurance policy, it is important to consider the cost of replacement coverage and the value of the death benefit. If the death benefit is no longer needed or can obtain replacement coverage at a lower cost, canceling the policy may be the best option. However, some policies may charge a small fee if the policy is canceled within the first few years.
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Coverage And Features Comparison
While whole life insurance provides coverage for the entire life of the person being insured, the protection of a term life insurance policy ends when the contract term expires, unless the policy is renewed. Another key difference is that, unlike whole life insurance, term life policies contain no loan value and no savings or investment component for building up their cash value. The sole monetary value of a term life insurance policy is its death benefit.
Make Use Of Your No Longer Wanted Life Insurance Policy
Many people do not know the benefits that a life settlement organization like Life Insurance Settlements can offer. In fact, most seniors dont know that they have this option but there and there are many reasons for selling your life insurance policy. Viatical settlements can be a valuable source of liquidity for people who would otherwise surrender their policies or allow them to lapse.
When you surrender your policy to your insurance company you will only get back your policys cash surrender value: pennies on the dollar. Similarly, when you allow your life insurance policy to lapse you are telling your life insurance company that you cannot pay your monthly dues anymore. The policy freezes and your survivors will not be able to receive the death benefits after your passing.
The beauty of a life settlement is that you receive a lump sum cash payment GREATER than the surrender value your insurance company can give you. The amount you receive depends on three factors: your age, health and the terms/conditions of your policy.
A life settlement can make sense for you if you no longer want or need your current policy, or if you can no longer afford the expense of paying insurance premiums.
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How Does The Type Of Life Insurance Affect The Cash Value
It is important to understand that some types of life insurance policies may or may not include a cash value feature. Pay attention to cash value life insurance vs term, since term life insurance does not have cash value. If you are looking for a type of life insurance that may have cash value, you should be looking for:
- Whole life insurance is the most common type of fixed-rate permanent life insurance and it covers a policyholders entire life if the premiums are paid on time. There is a guaranteed minimum cash value growth.
- Universal life insurance uses market interest rates to grow cash value. It is also adjustable and you can choose the level of premium and death benefits. Just like whole life, there is a guaranteed minimum cash value growth.
- Variable universal life insurance is linked with the savings component of variable insurance policies based upon performance of an index and usually has a maximum limit and a minimum floor. The premium is flexible the same as universal life.
- Indexed universal life insurance allows you to profit from market gains in an index fund tax-free while avoiding the danger of losing money during a market downturn.
Because each type of life insurance operates based on different funds, its possible for the cash value to be calculated differently.
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Can I Sell My Term Life Insurance Policy
When it comes to life insurance, there are many different options. One of the most popular is term life insurance, which provides coverage for a specific time. The policy ends when that time expires, and you no longer have coverage. If you decide that you no longer need or want your policy, you may be wondering can I sell my term life insurance policy?
This blog post will discuss the benefits of selling a term life insurance policy.
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Is Selling A Life Insurance Policy Worth It
For most people, selling your life insurance policy doesn’t offer a valuable return in fact, it could come with tacked-on costs that make it a burden rather than a financial gain.
You’re better off using traditional investment accounts, which have a higher rate of return, to access cash in retirement. If you can no longer pay for your policy, speak to an agent about ways you can alter your coverage to make it more affordable.
What Is The Best Type Of Life Insurance Policy To Sell
The Life Insurance Settlement Agency recognizes that institutions typically prefer to buy universal life insurance policies with benefits exceeding $100,000 from people who are older than 65. However, because there are people outside of those circumstances who want to sell their life insurance policies, there is an ample number of exceptions to those general rules of thumb.
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Selling Of A Life Insurance Policy For Cash
A life settlement, or selling a life insurance policy for cash, is feasible after a term life insurance policy is converted to a permanent policy. The seller gets a cash payout larger than the policys cash surrender value but less than the policys death benefit in this transaction. When the insured individual dies, the buyer takes payment of future premiums and gets the policys death benefit. To be eligible for a life settlement, you must be at least 65 years old, and some firms require you to be at least 70 years old or have a severe medical condition.
How To Sell Your Own Life Insurance Policy In Canada
By Michael White on March 24, 2021
Can you sell your own life insurance policy while youre still alive? The short answer is yesbut there are conditions.
Can I sell my life insurance policy? is a question Canadian insurance professionals are often asked. This might seem counterintuitiveafter all, we purchase life insurance to safeguard the financial security of our loved ones in the event of death, not to provide an infusion of cash while were still alive.
But some policyholders do sell their own policies, usually because of a personal cash flow crisis or an inability to continue paying premiums. Since life insurance can be considered an investment, so to speak, selling could make sense. It likely isnt an easy decision to make, but selling a life insurance policy can be a relatively quick and simple way to ease financial pressure in a time of need.
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What Are The Different Types Of Term Life Insurance Policies
Term insurance comes in two basic varietieslevel term and decreasing term. These days, almost everyone buys level term insurance. The terms level and decreasing refer to the death benefit amount during the term of the policy. A level term policy pays the same benefit amount if death occurs at any point during the term.
Health Of The Insured
The insureds current health is important not only because of its weight in the life expectancy calculation, but also because the insureds health at the time the policy was issued relative to today could uncover value within the pricing illustration. Because of this, the insureds health is a major factor in determining your policys value.
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S Involved In Selling Your Life Insurance Policy
The next thing you need to do if you want to sell your life insurance policy is to choose a buyer. It can be a time-consuming process to find a life settlement company on your own but this should not discourage you. Sell My Life Insurance Policy acts as an intermediary between people interested in selling their policies and companies wishing to purchase them. We share your provided information with several potential buyers upon completion of our three-step online form. If interested in purchasing your policy, these companies will contact you to get more information about you and your policy.
After verification of your information, the life settlement company may present you with an offer for your policy. If you accept an offer, the next step is to review and sign the documents and make the company the new owner and beneficiary of your life insurance policy.
Once the policy is transferred, the lump-sum payment is given to you from the buyer in your chosen form of payment. Depending on the company you work with, you can receive the funds from your life settlement in as little as 1-2 weeks. Then, you can use these funds for your retirement, a vacation, to pay for medical costs, or any other reason you see fit. Meanwhile, the company who purchased your policy will continue to make premium payments through the lifetime of the policy.