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Life Insurance Settlement Can Offer Options If You No Longer Need or Want Your Life Policy
By Allan H. Carney, WMS™
What can you do when you no longer need a life insurance policy or you can no longer afford the premiums? For many years, your only options were to surrender the policy and receive any cash value from the policy (if not term insurance) or to continue paying the premium. There is another option: the LIFE SETTLEMENT.
This is a “secondary market” that is available in all states, in which financial institutions, investment funds and even individuals buy a life insurance policy, pay the premiums and then collect the benefit when the person insured by the policy dies. Since this life settlement market began to develop more than a decade ago, millions of dollars have been paid for life policies. Policies that can be sold on this market generally require at least a $100,000 death benefit, and often much more. They must be “permanent” life insurance policies, or term policies that can be converted to “permanent” policies.
There are several reasons you might consider this option. For example, you purchased a life insurance policy on yourself with your spouse as beneficiary, and your spouse has predeceased you. Maybe you bought a policy with your children as beneficiaries, and your children are now grown and self-sufficient – or perhaps they have lifestyles you no longer support. In general, this option is available to people who are at least 75 years old, or who have a life expectancy of less than 12 years.
Depending on your age, health and life expectancy, you could receive 10% to 35% or more of the face value of the policy. You can use that money to purchase a life insurance policy that meets your current needs, buy a single-premium immediate annuity with an income stream that is guaranteed for life and/or the life of your spouse, purchase a long-term care insurance policy, invest or spend the money any way you choose. You can also sell the policy and name a portion of the death benefit as an irrevocable beneficiary. This would allow you to designate that portion to go to a family member with no additional premiums to be paid by you.
If you decide to pursue this option, we begin by discussing your reasons, to ensure that you fully understand the consequences of taking this action. We also suggest that you consult your accountant and attorney before moving forward.
The process includes collecting your medical records, and obtaining two life expectancy certificates from companies that use your medical information to estimate your life expectancy. This helps the buyer to estimate a potential return on investment. We do not share that information with you or your family unless you want us to do so. There is no guarantee that your life expectancy estimate is accurate; you could live longer or shorter than expected.
When we have received the medical records, we approach the marketplace and determine what offers are available. If you decide to accept one of the offers, we handle the required administrative details.
It is important to note that your life insurance policy is an asset, much like a bond or other security. Your policy has value, and you are selling that value to a buyer because you no longer need or want this asset.
If you are interested in exploring a life settlement opportunity, we are available to discuss. You can contact Allan Carney at 847-572-0835 or firstname.lastname@example.org.