Skip to main content

FAQs

A life settlement involves several steps: first, the policyholder receives an evaluation of their policy’s potential value. If an offer is made and accepted, ownership of the policy transfers to the buyer. The seller receives a cash payment, and the buyer takes over paying premiums and becomes the beneficiary of the death benefit.

Typically, policyholders over the age of 65 with a life insurance policy worth $100,000 or more may qualify. However, younger individuals with certain medical conditions may also be eligible. The type of policy, premium costs, and life expectancy are factors that influence eligibility.

People choose life settlements for various reasons, including the need for immediate cash, the unaffordability of premiums, or no longer needing the coverage. Life settlements can provide financial flexibility, especially for those looking to supplement retirement income or pay for healthcare expenses.

The value of your policy in a life settlement depends on several factors, including your age, health condition, policy size, premium costs, and the death benefit amount. Each policy is unique, so it’s essential to have it evaluated to determine its potential market value.

The tax implications of a life settlement vary. Typically, any amount received that exceeds the premiums paid on the policy may be subject to taxation. It’s advisable to consult a tax professional for specific guidance regarding your situation.

The life settlement process usually takes between four to eight weeks. This includes policy valuation, underwriting, and negotiations. Once an offer is accepted, the policy transfer and payment occur relatively quickly.

Most types of life insurance policies can qualify for a life settlement, including term, whole, universal, and variable policies. However, policies with a higher death benefit and lower premiums typically have higher market values in settlements.

Once a life settlement is completed, the policyholder no longer owns the policy, and the buyer becomes the beneficiary. Therefore, the original beneficiaries will not receive the death benefit upon the policyholder’s passing.

When you surrender a life insurance policy, you receive its cash surrender value, which is usually lower than the death benefit and what you'd receive in a life settlement. In a life settlement, you can often receive a higher payout because you're selling the policy rather than forfeiting it.

Yes, a term life insurance policy can be sold in a life settlement, but it must be convertible to a permanent policy before the term expires. The policy’s value in a life settlement depends on whether it can be converted.

Once the life settlement is completed, the buyer assumes responsibility for paying all future premiums. If the buyer defaults on the premiums, the policy may lapse, and they would lose their investment.

Yes, in some cases, you can sell a portion of your life insurance policy, allowing you to keep a percentage of the death benefit for your beneficiaries while still receiving cash from the sale.

The primary risk is that your beneficiaries will no longer receive the death benefit after the sale of the policy. Additionally, life settlements can have tax implications, and some policies may become difficult to sell if premiums are high or health conditions improve.

It’s essential to work with licensed and experienced life settlement providers. Research companies carefully, check for proper licensure in your state, and ensure they follow regulatory guidelines. Working with a life settlement broker can also help you get multiple offers.

Most states have a rescission period, typically 15 to 30 days, during which you can cancel the life settlement agreement and retain your policy. It's important to understand your state's laws and deadlines for backing out of the transaction.

Yes, but any outstanding loan balance on the policy will be deducted from the final settlement amount. Policies with substantial loans may have lower settlement values, depending on how much debt is against the policy.

Receiving money from a life settlement could impact your eligibility for Medicaid or Supplemental Security Income (SSI). It's essential to consult with a financial or legal advisor to understand how a life settlement could affect your public benefits.

Alternatives to a life settlement include surrendering the policy for its cash value, borrowing against the policy, or reducing the death benefit to lower premiums. You may also explore other financial strategies with a trusted advisor to meet your needs without selling your policy.

Interested in Seeing What The Value is of Your Policy?