Life settlements are a transaction that allows a policy owner to transfer the ownership of his or her life insurance policy to a third party. In exchange for the policy, the third party or life settlement provider, will pay the policy owner a sum greater than the surrender value but less than face value or death benefit.
Some of the reasons someone might consider a life settlement include, but are not limited to, declining health, liquidity or cash needs, or they simply no longer need the policy.
When considering life settlements, always consult and work with a trusted financial advisor, as they will make the process smooth and seamless. The advisor will first be able to assess whether or not you are a good candidate for a settlement, and if a settlment is the best option. They will also be there to act as your advocate when dealing with providers or brokers.
There are several steps that a policy owner must take when moving forward with life settlements. First, they will work with an advisor who will help them to gather all medical records and in conjunction with a life expectancy provider, assess the policyowner’s life expectancy.
This information is then passed on to the broker or life settlement provider, who will determine the value and potential settlement amount. At this time, the policy owner can either accept the offer or look for others. Make sure you take caution at this stage, as you do not want to “shop” the settlement to many different advisors and brokers, as this will ultimately confuse the providers as to who has true control of the outcome.
Once the offer is accepted, the policy owner will then turn the policy over to the provider and accept the payment via escrow and completed signing of all required documentation.
For more information regarding settlements, please visit LIVEpdq.