Investors that are looking to life settlement policies as an investment will look closely at the policy type to determine if an offer can be made. There are several main types of policies, to include whole life, convertable term and universal life, and investors have their favorites.
Pricing life settlement policies is a complex process. Many calculations must be made before an offer to purchase can be presented. Since policies can have have an infinate amount of product design, cash values and interest rates, it would be correct to assume that no two settlements are exactly the same,
Investors generally like flexibility, and for this reason universal life policies tend to price better than a whole life policy, however there may be exeptions to the rule. Whole life policies tend to be heavy with cash and offer little or no flexibility in premium payments.
Term policies can be settled, but need to be converted to a permanent product offered by the life insurance carrier. A few items to look out for, the conversion privileges dictate the age at which a term policy must be converted. The drawback here is that most conversions must be done by age 70 (75 with a few carriers), and unless there are significant health issues with the insured, a long life expectancy may prohibit a life settlement.
Due to flexible premiums and other policy attributes, universal life may look for attractive to life settlement investors. The percentage of universal life policies sold as life settlement policies was significantly higher than that of other types of policies.
To determine the value of your policy, visit our online valuation tool LIVEpdq today!