Life settlement risk, what happens when a client passes away? When an insured sells their life insurance policy on the secondary market they forfeit the death benefit to the life settlement funder.
The life settlement risk initially is the loss of the death benefit to pay any taxes that become due upon the death of the insured as well as any expenses that the insured may leave behind for their heirs. However, this life settlement risk can be managed if the insured has other life insurance policies or the insured has remaining insurable interest to obtain an additional insurance.
Understanding life settlement risk is important when entering into a the transaction and there are now life settlement funders that offer a partial death benefit to the owners of the policy upon the demise of the insured with a reduced cash offer.
We, at Living Life, feel that it is important for the client understand the life settlement risk that can affect their families. Click the Live PDQ button to see if a life settlement might be right for you.