A Life Settlement, also known as a Senior Settlement, is the sale to a third-party purchaser of an in-force life insurance policy for its “fair market value” – an amount of money greater than the contract’s cash surrender value but less than its death benefit. The Policy Owner/Seller is not restricted in the use of the cash proceeds received from the sale. In return for the cash payment made to the former Policy Owner/Seller, the Settlement Company acquires ownership of the policy, names itself the beneficiary, is then responsible for paying the ongoing future premium payments, and ultimately will receive the death benefit at the insured’s death.
A Life Settlement is not the same as a Viatical Settlement. A Viatical Settlement is the sale of an in-force life insurance policy insuring a person who is terminally ill and expected to die within twenty-four months. A Life Settlement, on the other hand, applies to a longer time frame, typically between twenty-five and 144 months, and will usually be sought for other economic reasons, such as when an existing policy is no longer needed or the premiums are no longer affordable.
We at The Advanced Strategies Group have a lot of experience in the secondary market and have helped our clients sell hundreds of policies that they no longer needed. We feel the key to maximizing the profitability of a successful policy sale and delivering the greatest benefit to the Policy Owner comes from our experience and relationships with institutionally-funded providers. An inexperienced broker usually limits the “bidding process” to one provider or makes the mistake of using many brokers, which usually disrupts the secondary market bidding process.
In a recent life settlement case, a 68-year-old gentleman had a $400,000 15-year Level Term Life Insurance Policy that he bought to provide income to his wife if he died early. She passed on first and the term premium in the sixteenth year was too expensive for him to afford. The only option he knew about was to drop the coverage. Fortunately, he heard our ad on WWJ and called us to discuss his situation. Two months later, he walked away with $40,000 for a policy he didn’t need, could no longer afford and had no cash surrender value. That’s the advantage of working with an experienced team like we have at The Advanced Strategies Group.
The Advanced Strategies Group, Inc. paid for placement of this content. The firm’s views do not necessarily reflect those of The Daily Dash, WWJ Newsradio 950, or CBS Radio.
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