 Life Settlements: A Viable Option for Today’s Seniors Life settlements can be a viable option for seniors willing to exchange their life insurance policy for immediate cash. A life settlement is the sale of an existing life insurance policy for a lump sum of money. It allows policyholders to access the fair market value of their life insurance by selling their policies and receiving payments greater than the cash surrender value.
Technically, a life settlement contract allows you to sell your insurance policy to a third party in exchange for a reduced amount of the face value. This is possible because a life insurance policy is actually property, like a car, house, stocks and bonds that can be legally sold. A life settlement essentially lets you extract value today from an asset that is generally thought to only have a benefit when you die. Typically, life settlement transactions involve life insurance policies of a large face amount; “key-person” coverage or corporate-owned life insurance; or policies representing excess coverage that is no longer needed. Here’s how a life settlement works: When a life settlement company buys your life insurance policy, it pays you a percentage of the policy's face value. Then the life settlement company becomes the new beneficiary of the policy at maturation. As such, it is responsible for all paying all future premiums and collects the entire death benefit when the insured dies. A Growing Industry With a life settlement, you can receive a large sum of cash in exchange for your insurance policy while you’re still alive. This eliminates premium payments, accommodates the changing needs of your dependents and provides greater financial flexibility. Life settlements can also be used for charitable giving. Complex estate and tax planning strategies can apply when using life settlements in a planned giving program. But here’s how this works in simplest terms: You donate your life insurance policy to a charitable organization, which immediately sells the policy for a lump sum of cash via a life settlement. These and other benefits are making life settlements an attractive option for seniors with unwanted/unneeded insurance policies. Consequently, the life settlement industry has seen significant growth in recent years. A study by Conning & Co. Research found that senior citizens owned approximately $500 billion worth of life insurance in 2003, of which $100 billion was owned by seniors eligible for life settlements. Since 2003, more and more of these eligible senior clients have sold their policies and helped the market increase. Separate research by the University of Pennsylvania's business school found that life settlement providers paid approximately $340 million to consumers for their underperforming life insurance policies, an opportunity that was not available to them just a few years before. "We estimate that life settlements, alone, generate surplus benefits in excess of $240 million annually for life insurance policyholders who have exercised their option to sell their policies at a competitive rate," according to the research. Selling Your Policy You could be a prime candidate if you are of retirement age, have paid off your mortgage and other debts, and no longer require the financial protection of life insurance. The amount you receive will depend on your age, health, death benefit, and the number of years your policy has been in force. Seniors with the greatest chance of selling their policies are those that are older than 65 years of age, have a calculated life expectancy of more than two years (but less than 10 years) and may have experienced a health change that has led to their insurance premiums increasing. Depending on the policy holder’s life expectancy, just about any type of policy can be sold, including universal life, whole life and convertible term contracts. However, policies generally must be valued at least $100,000. Determining whether to sell your life insurance policy is a purely personal decision. You might consider a life settlement under the following circumstances: • Your employment status has changed. • You need additional funds to pay medical/long-term care expenses. • Your insurance premiums are too expensive and you can no longer afford them. • You would like to implement a charitable or family gifting plan. • You are facing bankruptcy. Consulting with an Advisor Before you decide to sell your insurance policy, you should examine all the available options, advises the American Council of Life Insurers, a Washington D.C.- based trade group. And instead of going it alone, consult with a financial advisor who is familiar with life settlements. This could include account/CPA, lawyer (especially elder law attorney), financial/estate planner, certified senior advisor or charitable trust officers. Additionally, you might consider working with a broker—although your financial advisor can submit your case to the life settlement company directly. However, in an industry where market value for life insurance policies may be unfamiliar, brokers typically do the best job of getting fair market value for policies. They submit life settlement cases and bids to multiple companies, which can facilitate negotiations between high bidders. Keep in mind that life settlement companies are essentially investors that fund many transactions each year. They hold purchased policies as portfolio assets, rather than making them available to outside investors. They also have in-house compliance departments to carefully review transactions, and they are backed by institutional funds from a major bank. Steps to Life Settlement Transactions Wondering what happens during life settlement transactions? Here are the steps involved in the typical transaction: • Step 1: You consult with an advisor and decide to sell your policy. • Step 2: You and your advisor select a broker. • Step 3: The broker submits your case (and you provide a release for your medical information) to various companies. • Step 4: If your policy is eligible for a life settlement, providers send offers to the broker. • Step 5: You accept an offer and then complete the company’s closing package. • Step 6: The life settlement company places a cash payment in escrow and submits change of ownership forms to the insurance carrier. • Step 7: Once the paperwork is verified, the funds are transferred to you.
0 Comments
 The risk of catastrophic loss during hurricane season requires an innovative approach to
property coverage—and a rapid response when losses occur. For over 40 years, Lexington Insurance Company has helped our brokers and clients prepare for, protect against, and recover from catastrophic losses. We are the leading U.S.-based surplus lines insurer, and a property and casualty market leader. Make sure you’re a step ahead of risk this hurricane season. Watch LexTV for the latest on hurricane risk and coverage solutions. Hurricane 2012 Update Dr. Phil Klotzbach updates his 2012 seasonal hurricane forecast and shares his outlook for the remainder of the season. This episode also introduces Lexington's new Hurricane Infographic which will help streamline the understanding of a hurricane event. If sickness or injury prevented you from working in the business...
How long could continue to take income from the business? Could you be replaced? How long could you afford to pay a replacement and at the same time pay yourself? How will your creditors be paid? Could you continue to make retirement contributions? How long could you afford to keep your employees? How long would your business be able to stay in business? How long will your partners want to keep you in the business? Where will the partners get the money to buy you out? |
Home Owners best Insurance
Tel(508)540-2601
 
Insurance ProductsAuto Insurance
Homeowners Insurance Condo Insurance Renters Insurance Rental Home Insurance Rental Condo Insurance Landlord Insurance Motorcycle Insurance Personal Umbrella Policy Earthquake Insurance Flood Insurance Off Road Vehicles Motor Home Insurance Mobile Home Insurance Travel Trailer Insurance Recreational Vehicles Boat & Yacht Insurance Jet Ski Insurance Personal Watercraft Snowmobile Insurance 
Categories
All
Archives
December 2019
 AuthorThis blog is intended to promote local events, businesses & non-profit organizations through out our network. Archives
December 2019
   Proudly doing business in the following Cape Cod, Massachusetts towns and villages: Barnstable, Bourne, Brewster, Buzzards Bay, Centerville,
Chatham, Cotuit, Craigville, Dennis, Eastham, Falmouth, Harwich, Hyannis, Hyannisort, Marstons Mills, Mashpee, Orleans, Osterville, Provincetown, Sandwich, Truro, Wellfleet, Woods Hole, Yarmouth, Yarmouthport |
RSS Feed
Arthur D. Calfee Insurance Agency, Inc. is a friendly local insurance agency proudly offering Massachusetts, Cape Cod and the Islands. Using innovative thinking, cutting-edge tools and expert resources at national and local levels, we deliver the best possible outcome on every policy we manage. Our local underwriting professionals focus exclusively on finding the best home insurance, homeowner's insurance, hazard insurance, investment property insurance, flood insurance, flood zone information, vacation home insurance, second home insurance, auto insurance, collector car insurance, business insurance, general liability insurance, property insurance, professional liability insurance, contractor's liability insurance, worker's comp insurance, key man insurance, whole life insurance, term life insurance, group or personal disability, & long-term care insurance policies to patrons in the following Cape Cod, Massachusetts towns, communities and villages: Barnstable, Bourne, Pocasset, Brewster, Buzzards Bay, Centerville, Chatham, Cotuit, Craigville, Dennis, East Dennis, Eastham, Falmouth, East Falmouth, Hatchville, West Falmouth, North Falmouth, Woods Hole, Harwich, Hyannis, Hyannisport, Martha's Vineyard, Nantucket, Marstons Mills, Mashpee, Orleans, Osterville, Provincetown, Sandwich, Sagamore, Sagamore Beach, Truro, Wellfleet, Yarmouth, and Yarmouthport.
Testimonials & Endorsements for the Best Insurance Agent on Cape Cod, MA
PHONE: (800) 479-2601 CUSTOMER SUPPORT & SERVICE
Falmouth Homeport Office - 336 Gifford Street Falmouth, MA 02540 * North Falmouth Village Office - 121 County Road North Falmouth, MA 02556
Please note: The above is meant as general information to help you understand the different aspects of insurance. This information is not an insurance policy, does not refer to any specific insurance policy, and does not modify any provisions, limitations, or exclusions expressly stated in any insurance policy. Descriptions of all coverages and other features on this page are necessarily brief; in order to fully understand the coverages and other features of a specific insurance policy, we encourage you to read the applicable policy and/or speak to an insurance representative. Coverages and other features vary between insurers, vary by state, and are not available in all states. Whether an accident or other loss is covered is subject to the terms and conditions of the actual insurance policy or policies involved in the claim. References to average or typical premiums, amounts of losses, deductibles, costs of coverages/repair, etc., are illustrative and may not apply to your situation. We are not responsible for the content of any third-party sites linked from this page.
© 2019 Copyright, Arthur D. Calfee Insurance Agency, Inc.
Calfee Cares.® Privacy Policy
Calfee Cares.® Privacy Policy