| Life Insurance Settlements allow the owner of
a life insurance policy to sell an existing policy to a financial
institution in exchange for an immediate lump sum cash settlement.
The amount paid for the policy is a discounted percentage of the
policy's net death benefit and represents the value of the policy
at the present time. The financial institution purchasing the policy
determines the purchase price by considering the insured's estimated
mortality (life expectancy) and the associated cost of premiums to
keep the policy in force for that length of time.
There are two types of life insurance settlement:
1. Life Settlements: Life
Settlements create immediate liquidity from a non-performing asset,
which allows
policy owners to cash out of
unwanted,
unaffordable
or obsolete life insurance policies insuring a senior over age 65.
Whether it’s called a Senior Settlement, Lifetime Settlement,
or High Net Worth Transaction – for seniors Life Settlements
have become a very important factor in the estate planning process.
Before the Life Settlement Industry came on the scene, the only
options open to seniors that owned a policy they no longer wanted,
needed or could afford, was to let it lapse, cancel, or surrender
the policy back to the carrier for the cash surrender value. Life
settlements allow qualified policy owners to liquidate a policy
for an amount considerably higher than the cash surrender value.
Allowing these seniors to use the proceeds of a policy they no
longer wanted to take advantage of important financial opportunities
using the proceeds they receive.
The Life Settlement Industry has created a competitive secondary
market for life insurance policies. With the advancement of Life
Settlements as a mainstream financial product, Life Insurance Companies
are faced with competition for the surrendered policies in a field
they once monopolized. There is now a highly competitive secondary
market for life insurance policies created by the Life Settlement
Industry. This puts the Consumer in the driver's seat! Consumers
are free to sell their policies in an open market for the highest
available price, considerably above the cash surrender value offered
by insurance companies.
Benefits to Policy Holders
- Relief of monthly premium expenses
- Funds to supplement retirement
income or to seek treatments not covered by health insurance
- Higher cash payout than the cash surrender value
- Profit from
a non-performing, often burdensome worthless asset
- Funding for
LTC policies, annuities or other investments
2. Viatical Settlements: enables persons facing a
terminal illness to utilize the present day value of their life
insurance policy. This form of settlement eases any financial burdens
that could arise from the high costs of medical care.
People have been selling or trading their ownership of life insurance
policies since the very beginning of the insurance industry. Prior
to the AIDS epidemic heightened in the late 1980's the practice
of selling or trading one’s ownership of a life insurance
policy was relatively unknown. The Viatical Settlement Industry
was born as insured individuals stricken with the disease learned
that there was a living value to life insurance.
Viaticals have become an important financial option to many terminally
ill individuals. These policy owners can ease the financial burdens
brought on by increased medical costs as well as compensate for
a loss of income due to illness.
Benefits to Policy Holders
- Relief from the cost of monthly premium
- Settlement income that
may be TAX-FREE
- Immediate cash to ease financial burdens
- Money to compensate
for loss of income
- Funds to seek alternative treatments not covered
by health insurance
- Money to pay off debts
|
