Life Settlement

Life Settlement policies can be sold by the aging insurer to a third party/investor who receives benefits of the policy after the death of the policyholder. The buyer becomes responsible for the premiums and liabilities of the policy after purchase.

One qualifies to sell their policy if over 55 and/or if  terminally ill. Brokers will shop providers to gain the highest return for the policy. Upon surrendering one’s life insurance policy for a lump sum, the buyer benefits from the remainder of the policy.

Transactions are fairly technical in how the sum to be dispersed is determined based on:

  • age of policy holder
  • disease diagnosis if any
  • terms of the policy
  • amount of the policy
  • extenuating circumstances surround a prognosis of potential health risk
  • risks surrounding a job if the policy holder is still working

Services

Life Settlements policies are considered an asset, and are used as professional financial tools by both the investors and the policy holders. A well planned life settlement policy can help seniors in their retirement years.

Specialization

On April 29, 2009, the United States Senate Special Committee on Aging conducted a study and came to the conclusion that life settlements, on average, yield 8x more than the cash surrender value offered by life insurance companies

Determine if the Life Settlement company is a member of the Life Insurance Settlement Association (LISA). This organization is the industry standard bearer that sets policies and has high ethical standards for all industry participants. Members of LISA must adhere to a strict code of conduct.

Preparation

Life Settlements are not simple transactions and they require professional expertise to deal with them successfully. Choose a professional who can make a strong case for your policy, and negotiate with the pool of investors.

  • All senior citizens, which are minimum 55 years of age can apply.
  • Policy face value amount should be higher then $50,000.
  • A policy that has been active for at least two years and has low cash surrender value with premium rate lower then 8% annually.
  • Understand the full financial picture of your parent, and how this instruments works to their benefit.
  • Your parent must be of “sound mind” to sell their policy; or the transaction must be done by a designated Financial Power of Attorney.

Evaluation:

  • How much experience do you have?
  • How many policies have you written?
  • If going through a Lawyer or CPA, find out if they are working through a broker or provider.
  • Are you a member of LISA? What additional affiliations do you have?
  • Do you have client testimonials? (Likely because financial transactions are confidential, it is acceptable that “references” will not be available, but testimonials should be.)
  • Will you work with my existing CPA, investment advisor, financial planner or attorney?

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