A life insurance policy is no longer performing as promised. The policy you bought several years ago was promised to ‘pay for itself’ after a period of time. For whatever reason, the life insurance company now says you have to pay to keep the policy in force. The insurance policy is no longer affordable. You don’t have or don’t want to allocate the funds necessary to pay ongoing premiums.
The insurance policy no longer serves its intended purpose. The policy was bought to protect your family from income loss, a business against your death, etc. For whatever reason, the policy is no longer needed. Financial circumstances.
Your financial circumstances, unwillingness to sell or mortgage a home, or sell other valuable assets dictates an interest in selling a life insurance policy. You/the policy owner can qualify for a life settlement if you are beyond the age of 65 and own a universal, term, whole life, survivorship, or group life insurance policy.
Life Settlement companies buy life insurance polices based on a qualification process.
Life Settlement F.A.Q.
If you are over the age of sixty-five, a life settlement maximizes your current assets by eliminating premiums and getting funds that can be used today.
A Senior life settlement is a way for a senior, beyond the age of 65, to sell a life insurance policy for more than it’s current cash surrender value. The cash payment (or settlement) is known as a Life Settlement or Senior Life Insurance Settlement.
For example: The sale of a $1,000,000 term life insurance policy by one of our clients resulted in a cash payment (Senior Settlement) to the seller of $200,000! Our client is spending the current value of his life insurance policy today and gifting more cash to his family today. Living for today!
Many people sell their life insurance policy for a cash settlement to get cash now so spend on current needs such as paying off a mortgage, medical bills, etc.
You can sell any size policy, there is no maximum limit. The minimum face value that can be sold is $100,000.
Face value of the policy,
Estimated mortality of the insured,
Loans against the policy,
Rating of the insurance carrier,
Cash value of the policy,
Type of policy and prevailing interest rates,
Premium payments required to keep the policy in force,
What types of polices are purchased?,
Government issued policies,
Term Life, Whole Life or Universal Life,
Many Group types of policies,
Corporate Owned Life Insurance.
Revenue received from a Life Settlement, the sale of a life insurance policy, are subject to taxation. However the entire amount you receive may be taxed in at least three different ways. In fact an amount equal to the amount the seller has previously paid in premiums may not be taxed at all. The amount equal to the cash surrender value minus premiums paid might be taxed as ordinary income.
While the amount received minus the greater of the cash surrender value or premiums paid may be taxed as a capital gain. Sellers should consult their tax professional for proper planning and reporting of their sale of a life insurance policy. The chart below provides and example of the three tiers of taxation.
Sell your Life Insurance Policy
Pro Life Settlements is proud to help seniors with Senior Life Settlements. We can help you determine if your life insurance policy qualifies you for a Senior Life Settlement and assist you in finding the best company willing to buy your life insurance policy.
Acting on your behalf we secure the highest quality institutional funding offers for paying our clients immediate cash for their life insurance policies. We obtain the highest offer by submitting applications to many institutions, negotiating the highest lump sum cash payment for our client.
Life Settlement Terms to Know
Certificate Holder: An individual, including any dependent, who is insured under a group life insurance policy.
Escrow Account: An account established by a life settlement company for the sole purpose of entering into life settlements wherein the funds payable to the owner are placed with an independent third party to be paid to the owner on the fulfillment of the conditions of the life settlement contract.
Escrow Agent or Trustee: An attorney, certified public accountant, financial institution, or other person providing escrow or trust services whose acts are governed under the authority of a regulatory body.
Funder The purchasing group that buys the life insurance policy from an individual who is involved in a Life Settlement or Viatical transaction. The funder typically becomes both the funder and the beneficiary of the purchased life insurance policy.
Insured The person, group, or property for which an insurance policy is issued.
Life Settlement: For insured individuals 65 and older or their policy owners who are looking to sell a life insurance policy for a net percentage of the face value.
Life Settlement Provider: A company that is entitled to act in the interest of the individual or group selling a life insurance policy. The role of a Life Settlement provider is to assist an individual with obtaining the highest offer for their life insurance policy.
Net Death Benefit: The amount of the death benefit under a policy to be purchased less any outstanding debts or liens.
Owner: The person who has all the rights and responsibilities under the policy. This definition recognizes that, in some instances, the owner and life settler may not be the same person under the policy.
Policy: An individual life insurance policy, a rider to an individual life insurance policy, a certificate or a rider to a certificate evidencing coverage under a group life insurance policy.
Seller Refers to the individual selling a life insurance policy.
Settlement Application: A written form provided by a life settlement company or broker to be completed by a the seller/owner for the purpose of applying to a life settlement company or broker to be considered by the company or broker for the sale of the policy insuring the life of a life settler.
Terminal Illness: An illness or physical condition that is likely to cause premature death, (most likely within 24 months) including but not limited to cancer or other illnesses.
Term Life Insurance: A life insurance policy which provides a stated benefit upon the holder’s death, provided that the death occurs within a certain specified time period. However, the policy does not provide any returns beyond the stated benefit, unlike an insurance policy which allows investors to share in returns from the insurance company’s investment portfolio.
Trust: Established by a life settlement company for the sole purpose of entering into life settlements wherein the funds payable to the owner are placed with a trustee to be paid to the owner on the fulfillment of the conditions of the life settlement contract.
Universal Life Insurance: Life insurance which combines the low-cost protection of term insurance with a savings component that is invested in a tax-deferred account, the cash value of which may be available for a loan to the policyholder.
Viatical Settlement: A transaction whereby a written agreement is solicited, negotiated, offered, entered into, under which a viatical settlement company acquires through assignment, sale or transfer of a policy insuring the life of an individual who has a catastrophic or life-threatening illness or condition by paying the owner or certificate holder compensation that is less than the net death benefit of the policy.