In part 2 of this series we’ll review the qualification process for securing a life insurance policy so you can understand how it is different than the qualification process for life settlements.
Insurance carriers have specific requirements that must be met in order to issue a policy. These requirements include, but are not limited to:
1. Completed life insurance application signed by insured and owner (if other than insured)
2. Completed age and amount requirements, primarily health and financial information.
3. Review and approval by underwriter.
The life insurance application is a form that will ask information regarding the person to be insured, such as personal information, owner and beneficiary information and medical information of the insured. Even though much of the same information is collected on applications for life settlements, it is treated differently.
Age and amount requirements vary by life insurance carrier, but in general will determine what medical and financial information will be required based on the attained age of the insured and amount applied for. This will include a health exam with blood and urine tests, possibly an EKG, motor vehicle reports, etc. In general, the higher the amount applied for and the older the client, the more information the underwriter will need in order to assess the case. In comparison, an examination and other medical tests are never requirements for life settlements.
After the above information is gathered, it will be sent to the carrier underwriter for review and comparison to their life expectancy tables. If there is additional information required to properly assess the case, the underwriter may ask for it too. Once received, a final review will be done and the offer will be given to the
client. If the offer is accepted by the client, the policy will be sent to issue. Not to overstate the obvious, but the healthier the insured (longer life expectancy), the lower the insurance premium. In comparison, for life settlements, the less healthy (shorter life expectancy) the insured is the higher the amount paid for the policy.
In the next post, we will review the qualification requirements for life settlements. In the meantime, please feel free to use LIVEpdq to see if your policy might qualify.