Life Settlement Loan
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Your life insurance policy is an asset just as a home, car, or boat. You may be able to use your life insurance death benefit to secure a Life Settlement Loan, and be able to get an immediate cash advance against the death benefit on your policy. Often there are no loan payments, premium payments, or interest to be paid while you are still living. The death benefit of the policy settles the loan after you're gone. Often a Life Settlement Loan may be possible even if living benefits or accelerated benefits are not an option to you through your insurance carrier.
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No Restriction on Use of Benefit
Unlike a Medicaid Life Settlement or an Accelerated Living Benefit there are no limitations on how you can use the benefit of a Life Settlement Loan, and the quaification process does not require terminal condition. Life Settlement Loans could be granted to policy owners with 5 years or more to live.
There is no requirement that you must need immediate care to qualify. In fact, there is no requirement that the funds are used for medical related needs or to pay medical costs. Use of the loan benefit is entirely up to the policy owner.
- Replace lost income
- Restore savings
- Pay medical bills
- Gifts to loved ones
- Your bucket list
What is a Life Settlement Loan?
As with an accelerated benefit or Living Benefit, a Life Settlement Loan will give you cash out of your insurance policy while you are still living. In this case, you are borrowing money against the death benefit of your life insurance policy, but unlike other loans you are not responsible to make premium or interest payments during your lifetime. Simply, the life insurance death benefit is used as a loan guarantee. The biggest difference between a Life Settlement Loan and a living benefit is the qualification criteria. Unlike an accelerated benefit, the qualification criteria for a life settlement loan are much broader and result in a more flexible benefit to the owner. Loan amounts can range between 25% and 50% of the death benefit. Get a value on your life insurance policy. Use our life settlement calculator to get an idea of the value you get out of your policy now.
Key Benefits
- No monthly loan premium payments
- Interest and principle on the loan is settled after death
- No more premium payments
- Personal credit history is not considered during qualification
- Remainder of death benefit still passed to loved ones
- No restrictions on use of benefit
- Can be used to gift to loved ones
- Loan benefit is generally non-taxable
Accelerated Benefits or Living Benefit
Many insurance companies make it possible for life insurance policy owners to collect part of their death benefits early – before dying – to cover extraordinary expenses. This is often called a living benefit or accelerated benefit by the insurance company. The living Benefit typically requires that the owner of the policy is chronically or terminally ill and there can be restrictions on how the benefit can be used. Living Benefits range from 25% to 75% of the policy’s death benefit depending on the policy’s face value, the state you live in, and your policy terms.