Life Insurance Settlement

Life insurance settlement is the concept of having a secondary market for life insurance where policy holders can sell off their policy to a third person at a higher rate. This settlement is useful for policy owners who have unwanted or unnecessary policy. The new policy holder will be paying the premiums thereafter and would be benefited by the same at maturation. You have to sell your policy at an amount greater than the existing cash surrender value but less than its net death benefit.

Life insurance settlement appears as a potent option when you no longer need that policy, or if the premiums become unaffordable, or medical/ long term care is needed, or change in employment status, bankruptcy, non materialization of investment projections, or ILIT (Irrevocable Life Insurance Trusts).

Life insurance settlement is quite complicated and often requires an expert financial advisor like accountant, attorney, Certified Senior advisors, financial planners, estate planners, insurance advisors, and charitable trust officers to conduct the transaction for you. You can also reach the settlement company through a broker.

Then you have to submit the policy for valuation accompanied by the release of medical information by the client. If the policy meets the eligibility criteria for settlement, then you can send offers either directly or through a broker. Once the offer is reviewed, the client accepts his preferred offer.

The client and the advisor would finish your closing package and return your essential documents. Then you have to submit the ownership forms to the insurance carrier. After verification of the documents, you will receive your funds.

Life insurance settlement is popular among high profile businessmen like Warren Buffet and also the media sources like the Wall Street journal, time Magazine, Business Week and the Economist.

The life insurance settlement industry’ development and promotion is managed by LISA or Life Insurance Settlement Association. It acts as a valuable source of information for the public who are planning to go for life insurance settlement.

The life insurance settlement can be done for universal life, whole life and convertible term life insurance. The value of the settlement is decided by many factors including age, health status, type of the policy, rating of the company offering the policy, and the amount of premium payments. But once you succeed in selling your policy, then you have the liberty to use the funds as you like.