Life settlements are life insurance policies that are sold to third party investment companies where the insured is expected to live at least two years from the date of sale (exceptions can apply). This is a great option when the life insurance policy purchased years ago no longer is needed for its death benefit, and if sold, could bring you more than you’d received if you just cashed it in or let it lapse. Here are some typical situations where it can make sense:
- Premiums on your existing policy have increased significantly affecting your ability to keep the policy long-term
- Your term life policy’s level period is ending and you can’t afford to convert it and maintain premiums long-term
- You’re an executive that retired and received an unneeded life insurance policy as deferred compensation
- Changes within your business’ buy/sell agreement changed and the insurance is no longer needed
- Your business is being dissolved or sold and the life insurance is no longer needed
- Divorce changed your needs for life insurance
- You need the funds for long-term care expenses more than the policy benefits offer
- Your estate plan has changed and no longer need the insurance
Whether the policy is saleable depends primarily on the insured’s age, gender and health primarily, although there are other factors such as the policy type and current cash value that will be considered along with others. As you might suspect, underwriting for selling a policy are the reverse of purchasing one…the poorer your health, the more they’ll offer you for it. However, if you are deemed terminal and are expected to live less than 24 months, most life insurance policies offer an acceleration of death benefits that likely will be more financially advantageous to take advantage of than selling the policy.
Although this may not be base minimums with all 3rd party policy investment companies, generally you they are looking to purchase a policy with an insured of a minimum age of 65, face amount of $250,000 and an insurance carrier “B+” or better by AM Best. If you meet these minimums, we invite you to contact us to determine if your life policy may be a good candidate to sell. Please call us at 262-366-2702 or e-mail at .