Life seldom works out as you plan. You may have gone to college in Boston to become a lawyer and wound up running a restaurant in San Francisco. You may have thought you would never get married, but now are living in the suburbs with a family of four. If you bought a life insurance policy somewhere along the way, that policy may be worth a great deal of money today as an insurance settlement.
Life Settlement Providers
A life settlement provider may be able to help you convert your policy to cash. Life settlement providers are companies, or sometimes individuals, who operate in the secondary market for insurance. You should not confuse them with life insurance companies. They are in the business of aggregating and buying policies and do not have any fiduciary relationship with their clients.
In order to be able to sell your policy to a life settlement provider, and get the money you need, your policy must be attractive enough for the provider to want to make you an offer. When you qualify for a life settlement and decide to sell your policy, you are giving up ownership in the policy. In exchange for a lump sum payment, the life settlements provider becomes the sole beneficiary of the policy.
While the guidelines may be slightly different based on which life settlement provider you select, it is a fair statement to say that in order to qualify, you must have a major slippage in health which results in a fairly dramatic reduction of your life expectancy. It is not necessary for you to be terminally ill to qualify for a life settlement. Use the life settlement calculator to estimate the value of your life insurance policy as a life settlement or viatical.
Backgrounds and Life Insurance Settlement Providers
A life settlement provider will want to know some things about you and your life insurance policy. First of all, because your health is a major factor in determining the potential value of your policy, the provider may want to review all of your medical records, get reports from doctors and consult actuarial charts to determine your life expectancy. Second, the provider will want to know the amount of your death benefit and if there are any loans against the policy. Your policy needs to be valued before an offer can be made.
A person may have a number of different reasons for wanting to sell their policy. Assuming you meet the conditions to qualify for a life settlement, you may want to make a deal because you have high out of pocket medical costs due to your declining health. The money you receive could be applied to pay for home health care to help you with your basic needs such as bathing or preparing meals.
You can also use the proceeds from a life settlement to take a trip across the country to visit family before your condition deteriorates to the point where you can no longer travel. If you are 95 but still spry, you will likely qualify for a life settlement and then you can use the money to try to do everything on your bucket list.
When life circumstances change, having a life insurance policy can be a real blessing. Why not get your policy valued and see if a life settlement provider can help you?
What are Life Insurance Settlements?
Your Old Life Insurance Policy May Hold Hidden Value as a Life Settlement
Most people, especially seniors assume that if they own a life insurance policy that they no longer need or want they have but two choices concerning the disposition of the policy.
- They can cash it in for the value of the policy’s cash surrender value, or
- They can let is lapse
These folks do not know about a third option, known as the Life Settlement option. Because the public is so poorly educated as to the benefits of the Life Settlement option, seniors are leaving loads of cash on the table when resolving what to do with unwanted or unneeded insurance policies.
What Is a Life Insurance Settlement?
Life insurance settlements or life settlements is a way for a person who owns a life insurance policy to monetize the policy for his or her use before they die. The insured sells the insurance policy to a life settlements company. The life settlement companies pay the insured more than the cash value of the insurance policy but less than the face value. When you sell your life insurance policy for cash, the seller gets immediate liquidity from an asset that was non-performing. The amount of money received is greater than if the insured cashes in the policy to the insurance company. Since the life insurance settlement option is not well known nor publicized, seniors mistakenly cash out policies leaving money they could have with a life insurance settlement behind.
In order to enter into life insurance settlements the seller must be over the age of 65.
Once the transaction is complete, the insured has nothing further to do with the insurance policy. The buyer makes the premium payments, and when the insured dies collects the death benefit.
What Determines the Life Settlement Value to the Seller?
Determination of the value of the policy to the seller is simply the highest price a buyer will pay for the policy. The primary evaluation tool used by the buyer is the Medical Evaluation (ME). The medical evaluation is a careful look at the medical records of the insured going back three to five years. A medical person reviews all medical records including hospital records, doctor’s office notes, lab results, and results of other diagnostic exams.
Based on this information, the life settlement company can make an educated guess as to how long the wait is to collect on the policy. This information determines how much more they will need to invest in it by paying premiums. If a medical evaluation determines that the seller has a year to live, he will receive a better payout than someone will with a similar policy that has an ME that estimates his remaining time to be three years to live.
In any event, the seller’s net gain is the face value of the insurance policy less the amount of the purchase price and the premium expense until the
policy pays out to the buyer.
“You must get your life insurance policy valued before you just throw it away. Seniors literally throw away billions of dollars a year.. without ever knowing.”
How to Find Your Life Insurance Policy Value
Most people, especially seniors assume that if they own a life insurance policy that they no longer need or want they have but two choices concerning the disposition of the policy.
- They can cash it in for the value of the policy’s cash surrender value, or
- They can let is lapse
These folks do not know about a third option, known as the Life Settlement option. Your life insurance policy value may be much more than you think. Because the public is so poorly educated as to the benefits of the Life Settlement option, seniors are leaving loads of cash on the table when resolving what to do with unwanted insurance policies.
What Is a Life Insurance Settlement?
Life insurance settlements or life settlements is a way for a person who owns a life insurance policy to monetize the policy for his or her use before they die. The insured sells the insurance policy to a life settlements company. The life settlement companies pay the insured more than the cash value of the insurance policy but less than the face value. The seller gets immediate liquidity from an asset that was non-performing. The amount of money received is greater than if the insured cashes in the policy to the insurance company and will vary from person to person as shown in these viatical life settlement case studies. Since the life insurance settlement option is not well known nor publicized, seniors mistakenly cash out policies leaving money they could have with a life insurance settlement behind.
In order to enter into life insurance settlements the seller must be over the age of 65.
Once the transaction is complete, the insured has nothing further to do with the insurance policy. The buyer makes the premium payments, and when the insured dies collects the death benefit.
What Determines the Value to the Seller?
Determination of the value of the policy to the seller is simply the highest price a buyer will pay for the policy. The primary evaluation tool used by the buyer is the Medical Evaluation (ME). The medical evaluation is a careful look at the medical records of the insured going back three to five years. A medical person reviews all medical records including hospital records, doctor’s office notes, lab results, and results of other diagnostic exams.
Based on this information, the life settlement company can make an educated guess as to how long the wait is to collect on the policy. This information determines how much more they will need to invest in it by paying premiums. If a medical evaluation determines that the seller has a year to live, he will receive a better payout than someone will with a similar policy that has an ME that estimates his remaining time to be three years to live.
In any event, the seller’s net gain is the face value of the insurance policy less the amount of the purchase price and the premium expense until the policy pays out to the buyer.
“You must get your life insurance policy value before you just throw it away. Seniors literally throw away billions of dollars a year.. without ever knowing.”
What are the reasons people cancel Universal Life Insurance?
In general terms, a policy owner’s decision to cancel a universal life insurance policy arises from one of the following:
- The owner feels that the policy is underperforming projections.
- Scheduled premium increases make the coverage unaffordable.
- The needs for which the policy was purchased have changed or no longer exist.
- To qualify for Medicaid, life insurance is non qualified asset
Consumer’s thinking on life insurance has changed dramatically over the past 50 years. Policy holders typically looked at a life insurance policy as an important element of protection that had to be kept in-force until their death. Life insurance loans were only taken on a policy if all other alternatives were exhausted. To that end, policies were rarely surrendered. Everything changed in the 1980’s when universal life insurance hit the street. Interest rates were historically high during the eighties. Many whole life insurance policy holders replaced their policies with universal life insurance policies to benefit from a higher projected return. For the most part that is when life insurance was started being viewed as an asset; an asset that had to be managed to provide maximum policy holder value.
Interest rates have declined and many UL policies never came close to realizing the cash values depicted on the illustrations at the time of the sale. Universal Life put that interest rate risk on the consumer. There are now some UL’s that have a guaranteed death benefit if the stipulated premiums are met, but that overall failure to even come close to projections have prompted many advisers to have those policies valued in the secondary market prior to surrender.