All About Selling Life Insurance Policy: Life Settlement Advisors & List of Companies

Taking Cash Value From Selling Life Insurance Policy or Life Settlement

If people are struggling to afford the premiums or not want coverage, they will sell their life insurance policy. Life settlement advisors can help for this process or you may contact any best life settlement company. Calculate cash value of life insurance or term insurance policy. If bank loan are hard to get or home equity has disappeared, people will turn to sell policies. This is known as a life settlement. The buyer of policy pays a remaining premium and will get the benefit after the death of insured person. However, life- settlement is immoral and unethical.

According to one study, a collective face value of $11.8 billion of existing policies was sold by policyholders last year. The policyholder has two choices- if he doesn’t want it, he can surrender the policy for its cash value or allow it to lapse. Before a few years ago a new third option developed is sold your policy which is known as a life settlement.

Buyers of life settlement policies, pay off lump sum amount to the policy holder, hold the policies till maturity and then collect the benefits or sell interests to hedge funds or other investors. The amount of settlement depends on insured person’s age, health, and the terms and conditions of the policy.

Life settlement should be the last stop for the policyholder and not the first because when a stranger has vested interest in your death, it can be an incentive for murder. Here, buyers are also taking a chance. Many times, an insured person can easily live longer than expectation. There are so many examples of investors that didn’t get the returns they expected because the person lived longer than expectation. Many people are likely to sell and buy these settlements in the tough economic times, despite all the warnings and the controversy.

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Here are some life settlement tips which should be kept in mind while transacting:

  1. Dealing with an only licensed entity of state will provide safeguards and also maximum advantageous tax treatment.
  2. An amount of policy that received after a death of policy holder is tax-free but a cashed-out policy is not tax-free. Make sure that you receive settlement amount only after deducting tax.
  3. Always accept policy documents after the sign of holder and his written agreement.
  4. A wealth preservation specialist with Sagemark Consulting says that choose a financial consultant who has experience of life settlements and who can explain all the classification of the deal.
  5. Before going for a life settlement, search for other options. You may en-cashed a policy or take a loan on that. Holders, who have a long-term, catastrophic or terminal illness, are also eligible for accelerated death benefits, which allow an insured person to receive benefits in advance of his/her death.

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