When faced with a serious medical condition, many people explore life settlements for terminal illness as a way to access immediate cash from their life insurance policy. While viatical settlements are available for those with a life expectancy of two years or less, life settlements are typically an option for individuals with longer life expectancies—more than two years. This financial option can help cover medical treatments, caregiving costs, or other expenses without waiting for the death benefit to be paid out.
For those who no longer need their policy or are struggling with premium payments, a life settlement can provide much-needed financial flexibility during a difficult time.
What Are Life Settlements for Terminal Illness?
A life settlement involves selling an existing life insurance policy to a third-party investor for a lump sum that is greater than the policy’s cash surrender value but less than its full death benefit. The buyer takes over premium payments and eventually receives the death benefit when the insured passes away.
Unlike letting a policy lapse or surrendering it to the insurance company for a small payout, a life settlement allows policyholders to get more value from their policy while they are still alive. The funds received can be used for anything, from covering medical expenses and long-term care to paying off debt or simply improving quality of life.
Who Qualifies for a Life Settlement?
While viatical settlements are specifically for individuals with a life expectancy of two years or less, life settlements for terminal illness may be an option for those who:
Have been diagnosed with a serious medical condition but have a life expectancy of more than two years. (Shorter life expectancies may qualify for a viatical settlement.)
Own a whole life, universal life, or convertible term life policy with a face value of at least $100,000.
No longer need or can no longer afford their policy.
Prefer to receive a lump sum payout now.
Common Conditions That May Qualify
While life settlements are often associated with aging individuals, policyholders with serious health conditions may also qualify. Some illnesses that may qualify include:
Each case is reviewed individually, and the key factor is life expectancy. Policyholders with progressive illnesses that significantly impact longevity but do not qualify for a viatical settlement may still be eligible for a life settlement.
How Much Can You Get for a Life Settlement?
The amount policyholders receive from a life settlement varies depending on several factors:
Life expectancy – Shorter life expectancies typically result in higher offers.
Policy type and size – Universal and whole life policies generally receive higher offers than term policies.
Premium costs – Lower premiums make a policy more valuable to buyers.
While offers can range widely, policyholders typically receive 10% to 60% of the policy’s face value. For example, a $500,000 policy could result in a payout between $50,000 and $300,000, depending on eligibility factors.
How Are the Funds Used?
One of the main advantages of a life settlement is flexibility. Unlike some financial assistance programs that restrict how money is spent, life settlement proceeds can be used however the seller chooses. Common uses include:
Long-term care – Paying for assisted living, in-home care, or nursing services.
Debt repayment – Reducing financial burdens by paying off outstanding loans or credit card debt.
Everyday living expenses – Maintaining financial stability for household bills and necessities.
Enjoying life – Taking a trip, visiting family, or making meaningful memories.
Benefits of Selling a Life Insurance Policy
✔ Immediate access to cash. ✔ No restrictions on how funds are used. ✔ Eliminates the need to pay future premiums. ✔ Potentially higher payout than surrendering the policy.
Is a Life Settlement Right for You?
If you have a serious illness but do not qualify for a viatical settlement, life settlements for terminal illness may still be an option. Selling your policy can provide financial relief, eliminate costly premium payments, and allow you to use the funds in a way that benefits you the most. To learn if you’re likely to qualify for a life settlement or a viatical settlement, please give us a call at 800-727-7654.
Health changes can significantly affect your life insurance policy’s hidden value, especially if you’re considering selling it in the secondary market for life insurance. Understanding the impact of health changes on life insurance policy value can help you determine the best time to pursue a life settlement and maximize your payout. When health declines, the perceived risk to buyers decreases, potentially raising the market value of your policy.
How Health Affects Life Settlement Value: What You Need to Know
When it comes to selling life insurance, one of the most critical factors influencing its value is the insured’s health status. In the life settlement market, potential buyers assess policies based on the policyholder’s life expectancy, which means recent health changes can greatly impact the policy’s worth. For instance, a diagnosis of a severe medical condition, such as cancer, heart disease, or ALS may increase the value of the life insurance policy to investors. This is because a reduced life expectancy typically can make the period for a payout shorter, meaning the buyer would likely receive the death benefit sooner.
Understanding how health conditions affect life settlement offers can be crucial for policyholders considering selling. If a chronic illness or other serious medical diagnosis has reduced life expectancy, it may lead to higher offers for the life insurance policy. Conversely, if health improves or a medical condition stabilizes, the policy’s value might decrease because potential buyers would anticipate a longer time frame for payout. Knowing when to sell a life insurance policy due to health changes can therefore make a significant difference in the financial outcome.
Viatical Settlements vs. Life Settlements: What’s the Difference?
While life settlements are often an option for policyholders with declining health, it’s important to understand the distinction between life settlements and viatical settlements. Viatical settlements are specifically designed for individuals who have been diagnosed with a terminal illness or other medical conditions qualifying for viatical settlements, with a life expectancy of two years or less. In these cases, the policyholder may be able to receive a higher payout because the death benefit is expected to be paid sooner.
On the other hand, life settlements do not require the policyholder to have a terminal illness. Individuals with less serious health conditions, such as manageable chronic illnesses or age-related health declines, may still qualify for a life settlement. While the payout may be lower compared to a viatical settlement, it can still provide a significant amount of cash for those looking to liquidate an unneeded life insurance policy. Understanding the difference between these options can help you decide which may be most suitable based on your health situation.
Why Medical Conditions Can Increase the Market Value of Your Life Insurance Policy
Investors looking to buy life insurance policies in the life settlement market are often willing to pay more if they believe the policyholder’s health issues will lead to a shorter life expectancy. Health conditions such as advanced diabetes, cancer, or severe heart disease can significantly increase the market value of a life insurance policy because these conditions indicate a reduced period before the death benefit is expected to be paid out. Even less severe health issues can impact the value of life insurance if they are expected to shorten the life expectancy to some degree.
However, if a policyholder experiences health improvements due to a new treatment or lifestyle changes, this can affect the value in a negative way. When a medical condition improves or stabilizes, it may indicate a longer life expectancy, prompting potential buyers to lower their offers because they would anticipate paying premiums for a more extended period before receiving the death benefit.
Maximizing Life Settlement Offers When Your Health Changes
To optimize the value of a life insurance policy in the life settlement market, understanding how health changes affect life insurance value is essential. Timing the sale to coincide with declining health can often lead to higher offers, whereas waiting too long might result in reduced offers if health improves. Selling life insurance with health issues can therefore be financially beneficial, but it’s important to know the right time to proceed. For example, after a significant health diagnosis, the market may be more favorable for selling.
Additionally, some policies may have riders or provisions that could be impacted by health changes. For instance, certain policies have accelerated death benefits that may be accessed if the insured has a very reduced life expectancy. Knowing how medical conditions and policy features interact can provide insight into whether selling the policy is the right decision.
The Importance of a Medical Underwriting Review for Life Insurance Sales
A medical underwriting review is a crucial step in determining the value of a life insurance policy in the life settlement market. During this review, independent underwriters assess the policyholder’s medical records to estimate life expectancy and evaluate the risk. The findings from this review, combined with the insured’s age and policy details, significantly impact the offers made for the policy. Accurate underwriting can better reflect how health conditions affect life settlement offers and the sale value of the policy.
For those considering selling a life insurance policy due to health changes, providing comprehensive medical records is vital. This ensures that the underwriting review accurately reflects the current health situation, potentially leading to higher offers in the market.
Strategies for Selling Life Insurance with Medical Conditions
If you have medical conditions, selling your life insurance policy can be a practical way to get more value from it. Understanding the impact of health changes on life insurance policy value is an important factor to consider. Here are a few strategies:
Know how medical conditions affect policy value: Different health conditions can influence the market value of a life insurance policy in various ways. Diagnoses like cancer or heart disease may increase the amount offered by life settlement providers, depending on the specifics of the condition.
Keep documentation updated: Providing accurate and up-to-date medical records during the medical underwriting review ensures the current health situation is properly evaluated, which may result in a better offer.
Be aware of policy details: Some life insurance policies have features that could affect the settlement offer. Understanding your policy’s terms can help set realistic expectations.
These factors can play a significant role in determining how much you might receive for your life insurance policy. Please give us a call at 800-727-7654 to learn if you’re likely to qualify to sell your policy for cash through a life settlement or a viatical settlement.
Did you know that you can turn your life insurance into cash when it’s no longer needed or becomes too costly to maintain? Many policyholders are unaware that selling their life insurance policy is an option that can provide significant financial relief. Known as a life settlement, this process allows you to sell your life insurance to a third party for more than its cash surrender value, but less than the death benefit, giving you immediate funds to meet current needs.
If your policy no longer fits your financial goals or is becoming a burden, a life settlement might be the right option for you.
What Is a Life Settlement?
A life settlement is a transaction where a policyholder sells their life insurance policy to a buyer in exchange for a cash payout. The buyer takes over premium payments and becomes the beneficiary, receiving the death benefit when the insured passes away. Life settlements offer policyholders a way to access the value of their life insurance while they are still alive, rather than surrendering it back to the insurance company for minimal value or letting it lapse.
This process has become more common as more people look for ways to tap into their assets to cover costs like healthcare, retirement, or simply to improve their quality of life. Instead of canceling a policy that no longer serves you, you can turn life insurance into cash that can be used for various needs.
Who Qualifies for a Life Settlement?
Not everyone will qualify for a life settlement, but several factors increase your chances of eligibility:
Age and Health: Seniors age 65 and older with declining health are typically the best candidates for life settlements. Buyers are looking for policies with a shorter life expectancy to receive a return on their investment sooner. When appraising a policy for value, the buyer must consider the amount of time they will be paying premiums on the policy.
Policy Size: Larger policies are more attractive to buyers, with most life settlements involving policies worth $100,000 or more. Some smaller policies may still qualify. If you are unsure, please give us a call to learn if yours may be eligible.
Type of Policy: While universal life and whole life policies are the most common for life settlements, some term life policies can also be sold in a term life insurance settlement, depending on their conversion options and the insured’s health. Convertible policies may be able to be sold, even if the insured is in relatively good health. Non-convertible term policies may be eligible if the insured has a terminal diagnosis.
The life settlement market is growing, giving more flexibility to policyholders who might otherwise let their policies lapse. However, each case is unique, and eligibility will depend on several individual factors.
Why Turn Life Insurance into Cash?
There are many reasons someone might choose to sell their life insurance policy:
Premiums Are Too Expensive: As you age, life insurance premiums can increase, especially for universal or whole life policies. If paying those premiums becomes a financial strain, selling the policy can relieve you of this burden while still giving you access to the policy’s value.
Life Changes: Perhaps your original reasons for purchasing life insurance have changed. You may no longer have dependents relying on the policy’s death benefit, or your financial situation may have improved to the point where the coverage is no longer necessary. As you are planning future financial goals, it may be worth reconsidering whether the policy still aligns with your needs.
Medical Expenses: Seniors often face significant medical costs that can drain savings and retirement funds. A life settlement provides a lump sum of cash that can be used to cover those expenses without depleting other assets.
Supplement Retirement Income: Many people use life settlements to enhance their retirement lifestyle. Selling a life insurance policy can provide additional sources of retirement income to travel, pursue hobbies, or enjoy a higher quality of life during retirement.
Debt Relief: If you have outstanding debts, a life settlement may be able to provide the funds necessary to pay them off, relieving financial stress and ensuring that your estate is debt-free for your heirs.
How Much Cash Can You Get?
The amount of money you can receive from selling your life insurance policy depends on several factors, including:
The size and type of the policy
Your age and health
The amount of premium payments remaining
The policy’s death benefit
Current market conditions for life settlements
Policy specifics and provisions
On average, policyholders receive anywhere between 10% to 30% of their policy’s death benefit, but this amount can vary widely. For example, a $500,000 life insurance policy could result in a life settlement payout of $50,000 to $150,000, depending on your circumstances. Some viatical settlements pay a much higher percentage. It is always wise to have your policy appraised for hidden value.
The Life Settlement Process
The process of turning your life insurance into cash is relatively straightforward. Here are the steps:
Policy Review: The first step is to contact a life settlement company who will review your policy to determine whether it’s a good candidate for a life settlement.
Application: If your policy is eligible, you may submit a formal application. This may require sharing information about your health, the policy, and your financial needs. With our direct platform, this step is greatly streamlined and you will only need to submit a few compliance forms rather than a lengthy application.
Offer Review: If your policy has value and there is interest, you’ll receive offers from interested buyers.
Accepting an Offer: Once you’ve reviewed the offers, you can accept the one that best meets your financial goals. The sale process will begin, and you’ll receive a lump sum payment in exchange for transferring ownership of the policy.
Completion: The buyer takes over the policy’s premium payments and becomes the beneficiary, while you receive cash and no longer have any obligations regarding the policy.
Is a Life Settlement Right for You?
Turning your life insurance into cash can be an excellent option for those who no longer need the coverage or who are facing financial difficulties. However, it’s essential to consider the following:
Impact on Estate Plans: Selling your policy means your beneficiaries will no longer receive the death benefit, so it’s crucial to consider how this will affect your overall estate plans.
Tax Implications: Are life settlement proceeds taxed? Life settlement proceeds may be subject to taxes, depending on your individual circumstances. It’s a good idea to consult with a trusted tax professional to understand the tax impact of a life settlement. Typically, viatical settlement proceeds are not taxed.
Alternatives: If a life settlement isn’t the right choice for you, there are other ways to access the value of your policy, such as a loan against the policy’s cash value or surrendering it for a smaller payout. Loans do require repayment and surrendering a policy usually results in a much lower payout than a life settlement.
For many, the ability to turn life insurance into cash can provide financial freedom and peace of mind. Whether you need to cover medical expenses, supplement your retirement, or simply no longer need the coverage, a life settlement offers a practical solution.
If you’re considering selling your life insurance policy, call us today at 800-727-7654 to learn more and find out if you’re likely to qualify for a life settlement.
When considering a life settlement, one of the most important questions is, “Do you qualify to sell your policy?” Understanding life settlement eligibility do you qualify? is key to determining whether you can turn your life insurance policy into a cash payout. In this post, we’ll explore the factors that determine life settlement eligibility and help you assess if selling your policy is an option for you.
What Is a Life Settlement?
Before learning about eligibility, it’s important to understand what a life settlement is. A life settlement involves selling your existing life insurance policy to a third party for more than its cash surrender value, but less than its death benefit. The buyer takes over ownership and beneficiary rights to the policy, continues paying the premiums, and ultimately collects the death benefit when the insured passes away.
Many people choose a life settlement when they no longer need their life insurance or if the premiums have become too expensive. The funds from selling a policy can be used for a variety of financial needs including medical bills, retirement expenses, or even a more affordable insurance plan.
Age and Health: Two Key Factors
The first major factor in determining your eligibility for a life settlement is your age and health status. Typically, seniors that qualify for a life settlement are 65 or older, but this can vary based on health condition.
Age Requirements:
The general benchmark for qualifying is being at least 65 years old, but insureds who are younger may qualify if they have a chronic or terminal health condition. It is always best to give us a call to discuss your unique case.
Health Condition:
Health is a crucial aspect of life settlement eligibility. Buyers are more interested in policies from individuals with shorter life expectancies because they’ll receive the death benefit sooner. While you don’t need to be terminally ill, those with chronic or serious medical conditions are more likely to qualify.
Policy Size and Type Matter
The type and size of your life insurance policy can also impact your eligibility for a life settlement.
Policy Size:
Most life settlement purchasers look for policies with a face value (death benefit) of $100,000 or more. While smaller policies can sometimes qualify, they may not be as attractive to investors.
Policy Type:
Almost all types of life insurance policies can be sold in a life settlement. However, some policies are more appealing to buyers:
Universal Life: These policies are highly attractive because they offer flexibility in premium payments and potential cash value growth.
Term Life: Term policies can be eligible, but usually only if they can be converted into a permanent policy. Some non-convertible term policies may qualify for a viatical settlement if the insured is dealing with a serious health concern.
Whole Life: Whole life policies often qualify due to their guaranteed coverage and built-in cash value.
Variable Life: While more complex, variable life policies can also qualify.
Premium Amounts and Cash Surrender Value
Another factor affecting a policy’s eligibility for a life settlement is the amount of premium payments. Potential buyers will factor in costs to keep the policy in force over your expected lifetime when calculating an offer.
In some cases, policies with a high cash surrender value can still qualify for a life settlement, but this is generally not ideal for a life settlement. If your policy has no or little cash value, it can be more likely to qualify.
How Long Have You Held the Policy?
Most life settlement companies require that policies have been in force for at least two years. This is due to contestability clauses. If your policy is relatively new, it may not yet be eligible for a life settlement.
Financial and Legal Considerations
While not a direct factor in determining eligibility, there are several financial and legal considerations that can impact your decision to sell your policy.
Outstanding Loans on the Policy:
If you have taken out loans against your life insurance policy, this can reduce its overall value in a life settlement. Some buyers may still be interested, but they will deduct the loan balance from any offer they make.
Legal Ownership:
You must be the legal owner of the policy in order to sell it. If the policy is part of a trust or another entity holds ownership, a principal, such as a trustee, must be available to sign initial paperwork and the contract should you proceed with a sale.
Beneficiary Concerns:
If you’re considering selling your policy, it’s important to consider the needs of your beneficiaries. Once the policy is sold, the buyer becomes the new beneficiary, and your heirs will no longer receive the death benefit. Discussing this decision with your family can help avoid misunderstandings later on.
Getting a Life Settlement Valuation
If you’re unsure whether your policy qualifies for a life settlement, the best first step is to contact us for a no obligation policy appraisal. After learning your age, policy type and premiums, and approximate health condition, we will be able to let you know if you are likely to be eligible for a life settlement or viatical settlement.
A valuation can give you a better idea of what to expect, and whether it’s worth pursuing a life settlement based on your specific circumstances.
Should You Pursue a Life Settlement?
Deciding whether to sell your life insurance policy through a life settlement is a personal decision that depends on your financial situation, health, and future needs. While many seniors find life settlements to be a valuable source of extra income, it’s important to weigh the pros and cons carefully. If you no longer need your policy or can’t afford the premiums, selling it might be a smart financial move.
Life settlement eligibility depends on several factors, including your age, health, policy type, and size. While every situation is unique, understanding these core aspects can help you determine whether selling your policy is the right choice. If you think you might qualify, the next step is to consult a life settlement company for an initial evaluation.
Please give us a call at 800-727-7654 to learn if you are likely to qualify to sell your policy for cash.
Most calls we have fielded from CPAs and Accountants over the past 15 years have been around cost basis. Accountants -many for the first time- were trying to calculate the cost basis of a life insurance policy. There was a next to impossible computation to interpolate the cost basis, which relied on cost of insurance information from the insurance company and many insurance companies wouldn’t disclose the information and some didn’t even track it. It became much easier to determine life insurance cost basis in 2017 with the passage of the Tax Cuts and Jobs Act.
Accountants, CPAs Discovering Hidden Value in Life Insurance
Today things are very different, most of the calls we get from Accountants are around assisting or facilitating the sale of their client’s life insurance policy. Many of the CPAs and Accountants are navigating a life settlement for the first time, because their client’s insurance agent or advisor is restrained from mentioning a life settlement, even though it is in their shared client’s best interest.
The Reverse Life Insurance platform digitally and compliantly garners all of your clients insurance information directly from the carrier and gathers all the appropriate medical information inside of HIPPA guidelines. Once the information is mustered, third party Life Expectancy estimates are obtained by licensed buyers utilizing our platform. There is no cost and no obligation to the seller. Accountants and CPAs discovering hidden value in life insurance can help their clients without taking an active part in the process.
Life Settlement Taxation
The Tax Cuts and Jobs Act of 2017 (TCJA) made a big impact on the taxation of life settlements. The law has two provisions favorable to life settlements. One makes the tax treatment to the seller more favorable by changing the treatment of proceeds from a settlement. The other provision is an increase in the estate tax exclusion amount, diminishing the need for a large policy to cover estate taxes.
Prior to the Tax Cuts and Jobs Act of 2017
Currently, the tax treatment of life settlement proceeds is the same as the treatment of funds received from surrendering your policy. Prior to TCJA, the tax treatment of funds received after policy surrender was more favorable than the tax treatment of funds received in a life settlement.
When surrendering a policy, the proceeds were taxed on the amount received minus the total cumulative investment (premiums paid in minus withdrawals and dividends.)
When selling a policy as a life insurance settlement, the basis was reduced by the cumulative cost of insurance (COI) charges. You could not deduct the full premiums paid into the policy and it was usually difficult to obtain a correct COI charge or any explanation for those charges from your insurance company. Now, the premiums paid are the cost basis, regardless of the amount utilized towards the cost of insurance. This is huge, and brings Term Life Insurance policies into play.
Prior to TCJA, the estate tax exemption was $5.49 million for a single taxpayer and $11.2 million for a couple filing jointly. There were many Estate Tax policies sold that have not only underperformed, but they often are no longer necessary. Universal Life and Flexible Premium Life policies with no cash value often have a hidden value as a life settlement. Many people hedged their insurance by purchasing large term insurance policies as the Federal Government discussed the potential estate tax threshold. If the term life insurance policies are convertible, which they typically are, there may very well be a hidden value, dependent upon the insured’s age, current health and policy specifics.
After the Tax Cuts and Jobs Act of 2017
As a result of TCJA, taxation of life settlements changed dramatically.
Tax Basis
Amounts received up to the tax basis are income tax free. Anything in excess of the tax basis (up to the surrender value) is taxed at ordinary income rates. Amounts received in excess of the cash value get favorable capital gains treatment. This applies to both funds received in a life settlement and those received after surrendering a policy.
Whatever your client paid into the life insurance policy minus anything taken out in the form of dividends, cash, or loans is now the tax basis. Money taken out of the policy or any proceeds from a life settlement up to this tax basis should incur no income taxes. For example, if a client paid premiums for 20 years at $3000 per year, the tax basis would be $60,000 regardless of the type of life insurance policy. Any amount received over the tax basis up to the surrender value of their policy will be taxed as ordinary income. Anything in excess of the surrender value is still considered a capital gain.
Estate Tax Exemptions Changes
The amount excludable from estate tax is now $11.2 million per person and $22.4 million per couple. People with large estates used to purchase policies for the sole purpose of paying for estate taxes. Now that the exemption amounts have been raised, many of these policies are no longer necessary. A life settlement is a great option to access the hidden value of an unneeded policy. Someone in this scenario could be able to stop paying premiums and receive cash money now.
Viatical Settlement Taxation
Viatical settlement proceeds are taxed differently than life settlement proceeds, but only if they meet specific requirements. The taxation of the proceeds was not affected by recent tax law changes.
In 1996, the Health Insurance Portability and Accountability Act (HIPAA) was signed into law. This act specified that proceeds received either from a viatical settlement or as accelerated death benefits on a policy in which the insured was chronically or terminally ill would be tax free as long as the policy was purchased by a viatical settlement company who is licensed in the seller’s state. To qualify for this tax treatment, the insured must have less than two years to live. Although most states follow this federal law, some still impose taxes on viatical settlements. As a tax advisor, you need to be prepared to advise your clients of the laws affecting them.
The proceeds from a viatical settlement in which the insured is considered chronically ill are taxed differently. In order for money received by a chronically ill person to be tax free, the proceeds must be used for the costs of long-term care services that are not covered by insurance. Otherwise, benefits not used for long-term care received in excess of an annually-adjusted limit are subject to taxation.
Considering the recent tax law changes, a life settlement may be a better option now than ever before.
Funds received as a result of a life settlement no longer receive unfavorable tax treatment when compared to those received after a policy surrender.
Viatical settlement taxation has remained unchanged and funds received in this type of settlement are in most cases tax-free.
The estate tax exemption has been doubled, so many policies taken out for the sole purpose of paying taxes are no longer needed. These policies can be sold for cash now, eliminating premium payments.
Why Don’t More CPAs and Financial Advisors Mention Life Settlements?
Many accountants and financial advisors often wrongly assume that their client’s insurance agent or advisor has educated them about life settlements and has already helped them to have their policy appraised. Most seniors purchased their policy years ago and are no longer in contact with their original insurance agent. Insurance companies certainly don’t reach out to clients to make them aware of any potential value in a life settlement or discuss how a policy is performing. If no one else is assisting your clients in understanding the value of one of their biggest assets, the duty may fall to you. Accountants and CPAs can help clients with discovering the hidden value in their life insurance policies by telling them about life settlements.
Most Accountants, when asked, simply do not feel qualified to discuss life settlements, have a bad taste in their mouth from something they have heard or just don’t feel that it is their responsibility. Any advisor knowledgeable about life settlements and other reverse life insurance options is more prepared to help their clients discover the hidden value in their life insurance policy, but you don’t have to be an expert to simply tell your client to have a life insurance policy appraised prior to any surrender or lapse.
Life settlements are legal and heavily regulated in most states. Only 5 states, Alabama, Missouri, South Carolina, South Dakota, and Wyoming are without life settlement regulation.
Several states actually have laws in place to protect consumers. In those jurisdictions with disclosure laws, insurance companies must make consumers aware of the possibility of a life settlement as an alternative to a policy lapse or surrender. Agents and advisors have already been sued for neglecting to educate their clients.
Appraisals Necessary for Discovering the True Hidden Value in Life Insurance
If you are selling real estate, a business, or any other valuable asset, you would hopefully have the item evaluated by a qualified appraiser if you could. A life insurance policy is no different. A life insurance policy is an asset and unfortunately, all too often, we hear of someone surrendering a policy and unwittingly throwing away hundreds of thousands of dollars. The fact is, their life insurance policy may be the most or one of the most valuable of your client’s assets, and they are often completely unaware.
Term insurance and policies with zero cash value often qualify as a life settlement. Your client’s life insurance policy may have an exponentially higher hidden value than the obvious cash surrender value offered by the insurance company.
How to Talk to a Client About Life Settlements
When considering a surrender or lapse of an unneeded or too expensive life insurance policy, your client may not even think to ask for your input. If life insurance is not something you discuss regularly, consider adding it to your client checklist. An accountant or advisor can help prevent clients from lapsing or surrendering policies before exploring all of their options.
Your clients may see advertisements about life settlements on television or social media. You should tell them to always get more than one offer, and if they can get a direct offer from a licensed Reverse Life Insurance buyer and save the 30% or more commissions most brokers charge, they will thank you and so will we.
Referrals
Anyone can make a referral to Reverse Life Insurance for a possible life settlement. You do not have to have an insurance license or any licensing for that matter. Should your client qualify and accept and receive their cash offer, you or your designate is eligible for a referral fee in all but a few states. This fee is paid by the licensed buyer above and beyond the sales proceeds your client receives.
With the current and more favorable treatment of life settlement proceeds as well as the diminished need for estate tax policies, it is a great time for your clients to explore the hidden value in their policy before they cancel it. Accountants and CPAs discovering hidden value in life insurance can often make a big difference in the lives of their clients.
Reverse Life Insurance is sometimes referred to as Life Settlements, but in reality Reverse Life Insurance is much, much more. While Life Settlements allow certain qualified individuals to sell their life insurance policy in the secondary market for life insurance, Reverse Life Insurance also facilitates solutions that allow qualified Policy Owners to receive a cash advance against their life insurance policy (Life Insurance Advance), convert their life insurance policy into an FDIC-secured benefit account to pay for long-term care (Medicaid Life Settlement), or sell their life insurance to pay for treatments and expenses from chronic or terminal illnesses (Viatical Settlements). Reverse Life Insurance even helps qualified Policy Owners sell their Term Life Insurance policies with no cash value (Term Life Insurance Settlement).
Do You Qualify?