A life settlement provider is the party who pays you for your life insurance policy. A provider could be purchasing your policy for themselves or for an institutional investor, usually some kind of financial institution such as a bank. A settlement provider will be licensed by the Department of Insurance to deal in life settlements.
A life settlement provider will help you with everything you need to complete a successful life settlement. They will help you determine your eligibility, which is based on:
They will also help you determine the value of a life settlement, based on factors such as:
A life settlement provider will find you the best buyer, who will then pay you the value determined and take over paying the premiums on your policy. When you die, the buyer will receive the remaining benefit from your policy.
Those who invest in life settlements must have a lot of money. In general, financial institutions, banks, mutual funds, and hedge funds invest in purchasing life settlement policies. In general, life settlement investment is a good option. Life settlements have a very stable rate of return and are tied up in insurance companies, which are more secure than many other investment opportunities tied up in the market. Plus, because seniors want to sell their life insurance policies, investing in life settlements makes it a win-win situation for everyone involved.
There are a few options for investing in life settlements:
Although life settlement investing is a steady option, it comes with some disadvantages. In order to purchase as an individual, you must make at least $200,000 annually, and your funds will be tied up for several years before you can cash in the policy value. In addition, some states do not offer such settlement plans and the rules regulating settlements can be complicated.
If you’re looking to cash out your policy but aren’t sure you want to go all the way with a life settlement, there are alternatives. It can be frightening to sell your insurance outright. Plus, there are certain qualifications: you must be at least 65 and have $100,000+ in death benefits. If you’re looking for other options, here are a few:
These options are all possible solutions if you’re unwilling or unable to commit to a life settlement.
Choosing to pursue a life settlement can be a confusing process. Thankfully, you don’t have to do it alone. There are tons of companies out there who can provide you with the services you need to make a wise decision. You can learn about market trends, cash value calculations, state or national laws and regulations, and much more when you talk to a licensed life settlement provider.
If you’re interested in getting started, check out this free life settlement calculator or get in touch with us to see if you’re qualified and how we can help you get the money you deserve.
Most life settlements are not taxable up to the surrender amount. However, you must be eligible according to the IRS and some state rules may apply.
Buyers of a policy will consider age, life expectancy, the amount in premiums they will have to pay, and the death benefit of the policy. They will then determine the overall value.
If you are no longer able to afford premiums, your beneficiaries are provided for, and you need extra cash, a life settlement is a great option.
There are three main types:
In a viatical settlement, the policy owner must be chronically or terminally ill and need money for medical expenses.
In a traditional settlement, the policy owner must be 65 with $100,000 in death benefits and will sell the policy for cash.
In a retained death benefit settlement, the policy owner will sell part of the policy value and retain a portion to secure funds for their beneficiaries.
Whole life and universal life policies are eligible for life settlements.