A life settlement is the sale of an existing life insurance policy, of someone age 65 or above, on the secondary market for more than its cash surrender value.
An application is completed along with a medical information form so that the third party can gain information about you and your life insurance policy. This information is kept confidential. A package is prepared and shared with investor to create the highest offer for your policy. Once the offers have been collected we present them to you for review. Should you accept one of the offers the transaction goes through an escrow somewhat similar to real estate transactions.
Although the life settlement industry started in the 90’s, the industry has not seen significant growth until recently. Many people have exercised the life settlement option, but most consumers, as well as financial and insurance professionals, are not aware that the life settlement option exists. With people living longer and wanting more in their retirement, life settlements have gained popularity in recent years. They have become a viable alternative to realize immediate cash.
Policy owners sell their policy for many reasons including: policy is no longer required to provide security to their children or spouse, the premiums have increased and the policy is no longer affordable, need to pay medical or long term care expenses, pay off debts, assist kids/ grandkids with education or other needs, key man policy is no longer required since owner retired, etc.
Yes, 47 of 50 states, representing > 90% of the population live in states that regulate life settlements. Some states like Washington have passed additional regulations requiring insurance companies to disclose life settlements to seniors whose policy is lapsing or surrendered.
The life settlement market is growing with over 10,000 people turning 65 every day and 44% of seniors owning life insurance policies. The Net Market Potential for life settlements is $122,000,000,000 for 2014 – 2024 (Conning & Company).
Yes, you will be presented a number of offers but are not obligated to complete the process. Most states also provide for a rescission period.
Most life settlement candidates are people 70 years or older who have re-evaluated their need for a life insurance policy. Rather than continue paying expensive premiums for an unneeded or unwanted policy, they convert it to cash funds to enjoy while they are living. If you are younger than 70 and are currently dealing with serious illness, you may also be eligible for a life settlement. To see if you qualify, please complete our qualification form.
Your settlement contract should specify how many days you have to change your mind after the sale, usually it is 14 days.
Do I still need life insurance?
Should I consult a tax or estate-planning advisor before I sell?
Who will have information about me, my health and my family if I sell? How can I protect my privacy? What are the confidentiality policies of the parties involved?
What are the transaction cost?
If I decide I need life insurance after my settlement, will I be able to buy a new policy at my age and health?
Yes. According to a U.S. Supreme Court ruling dating back almost a century, a life insurance policy is considered your personal property. Like any other property, you can sell it, trade it, or give it away. Your insurance company generally has no right to block or question your assignment of the policy rights.
Yes, terminally ill individuals are typically well-qualified for settlements. These type of transactions are generally referred to as “viatical settlements”. We have been very successful in obtaining outstanding results for individuals fighting terminal illness.
Universal Life, Whole Life, Variable Universal Life, Term and Convertible Term Life policies issued by U.S. based insurance companies. Joint, second-to-die policies, group policies are typically eligible as well.
Generally, a policy with a face value of $100,000 or higher may be eligible to convert into a life settlement.
Perhaps, but this can be a costly decision. Generally speaking, the surrender amount on your policy is a fraction of what we can sell it for in a life settlement.
Absolutely, your identity is never revealed to anyone without your consent.
When considering options for your existing life insurance policy these are usually your only choices:
o Continue paying your unwanted or unaffordable premiums.
o Let the policy lapse and have nothing to show after all those premium payments.
o Get a cash surrender value, which is usually a fraction of what you’ve given them all of these years.
o Sell your policy by exercising your life settlement option for an amount greater than the cash surrender value!!!
Yes, Life Settlements can be donated to charities.
On average, it takes approximately 2 to 3 months to complete the process. Obtaining information from your doctors and insurance company is the most time consuming phase of this process.
Offers are based on the number of factors including: age, health, how long the policy holder is expected to live, premiums, the rating of your insurance company as well as a number of other factors. Two recent studies reported that the average life settlement was 4-7 times cash surrender value. (US GAO & Januario & Naikour).
There are no application fees, invasive interviews or physical health examinations. Medical underwriting is based on an independent review of the medical records obtained from your health care providers.
No. There are no costs, application charges or hidden fees you will incur when working with Life Insurance Settlements Northwest. We will be paid a commission by the investor-purchaser that will be disclosed as part of the transaction.
The investor that purchased the policy will be the owner.
Life insurance policies are purchased by licensed life settlement provider companies who are interested in holding a variety of assets to balance their overall investment portfolios. Most provider companies work exclusively with large institutional investors such as banks and pension funds.
No. Once the policy is sold, you will have no future premium obligations whatsoever.
We strongly recommend working with a licensed broker rather than directly with the potential buyer. As a broker, we will provide you multiple offers to choose from, as opposed to only one if working directly with a buyer. This ensures you receive the maximum value for your policy. We work strictly on an industry-set percentage fee basis and there are NO other fees or costs.
They can be. Portions of the settlement may be tax free, ordinary income or capital gains. We would encourage you to consult a tax advisor their expert opinion.
No, Unlike other financial options for seniors, there are no restrictions on how the proceeds from a life settlement can be used.
Do you have a question that is not listed here? We are ready to provide an answer! Please use the form below to send us your question.