Why sell my life insurance policy?
The principal reasons folks sell their life insurance policies include:
The policy is about to lapse — As policyholders grow older, they may simply find it inconvenient to continue paying the premiums, and thus prefer to let the policy lapse. But before you consider this, find out your policy’s current value, because if you let it lapse you could be leaving money on the table — possibly tens of thousands of dollars that rightfully belong to you.
- The beneficiary is provided for by other means — Life insurance policies are often taken out at a time in your life when there is a greater need for coverage, such as when your children are young. As you grow older and build net worth, and as children leave home, the need for the policy lessens.
- The policy is no longer needed — Business owners who sell their businesses may no longer need the policy because it was taken out primarily as protection for their firm. For others, the beneficiary may have passed. There can be as many reasons for no longer needing a policy as there are policyholders.
- Premiums have become a burden — Senior-age individuals on a tight budget may find it increasingly burdensome to pay the premiums on their life insurance policies. If that is your situation, don’t simply let your policy lapse, cash it in.
- Cash is preferred to coverage — Many seniors today are faced with mounting expenses: Home repairs… Assisted living… Credit card debt. You may even need cash to help family members with their financial obligations. Whatever your need, selling your life insurance policy can be a viable option for getting the cash you require.
Why shouldn’t I deal only with my life insurance company?
Truth be told, life insurance companies act in their best interest, not yours. They have no incentive to pay you fair market value for your policy. If they do, they lose money. Surrendering your life insurance policy back to your insurance company, and letting them set the surrender value would be like selling your home to the people or builder you originally purchased it from and letting them dictate whatever sale price they wanted, regardless of the fair market value.
Our mission at Ringo Financial & Insurance Solutions, LLC. is to secure top dollar for your life insurance policy. Before you make a final decision, seek an independent appraisal. At Ringo Financial & Insurance Solutions, LLC., that appraisal is free for qualified candidates.
How much cash can I get for my policy?
Your policy’s Life Settlement cash value is determined by several factors, including the amount of the policy’s face value, the age of the policyholder, and the financial stability of the issuing life insurance company. An appraisal specialist from Ringo Financial & Insurance Solutions, LLC. will explain the key factors influencing your specific appraisal.
It is possible that you can get substantially more for your life insurance policy in the free marketplace than if you accept its cash surrender value as stated by your insurance company. Even term life insurance policies that your life insurance company says have no surrender value may have a significant cash payout in the open market.
Surrender Value vs. “Cash Settlement” Value
Type of policy
|Face amount||Surrender value offered to policyholder by the life insurance company||Cash received by policyholder when selling to third party via “Life Settlement” option|
|The case examples here are true and accurate. They are for illustration purposes and do not represent future offers, statements, percentages, or amounts. Actual results will vary.|
Who buys the policy?
Financial institutions and investor groups are attracted to the Life Settlement marketplace because it provides them with the potential for greater returns than they can receive from, for example, money market funds. The return rate that an investor group or institutional funding source receives is determined by several factors, including the sale price of your policy, the face value of the policy, the number of premiums the investor pays over time, and the like. Once your policy is sold, strict privacy laws are adhered to. Your policy is placed in a portfolio of thousands of policies and is serviced by a third party. There is no personal or private information in the portfolio on any of the policyholders. Typically, there is only a policy number, age, life expectancy, annual premium amount and insurance company listed in the file. Almost all state governments have strict regulations involving the sale and servicing of life settlements.
Who makes the insurance policy payments once it is sold?
The buyer of your policy assumes full responsibility for all future payments. You never see another bill or reminder.
Who is the beneficiary once my policy is sold?
The institutional funding entity who purchases the policy becomes the beneficiary.
Once I sell my policy, do I have any further obligations?
No. Selling your insurance policy is like selling any other asset you own outright, in that the cash you receive from the sale is yours. All rights and obligations attached to the policy are transferred to the new owner. You will no longer be responsible for making premium payments on the policy. The new owner will make the premium payments.
Are there any special tax considerations?
Please check with your accountant or tax professional for any tax considerations associated with your life settlement.
What types of insurance policies can be cashed in?
Almost all policies – Whole life, Universal life, Joint Survivorships, Variable and Term insurance. To find out if your policy qualifies, give us a call at (909) 586-5683
What happens to the policy when I pass away?
The institutional funding entity who purchased your policy will collect the proceeds upon the insured’s passing.
How do I qualify?
Minimum requirements are:
You must be age 70 or older for most types of policies. We will consider any life policy when the insured is living with a serious illness, regardless of age. Medical records will be needed to complete the application process. In most cases, Life Insurance Settlements, Inc. will be able to obtain these records.
Your life insurance policy must have a minimum death benefit value of $100,000.
We’ll also need to know the type and amount of your life insurance policy, your exact age, any health issues or concerns, plus a few other facts. Call us and we can help you with the qualification process:
Is a medical exam required?
Our clients are not asked or required to take a medical exam, although you may be asked to supply medical records in certain cases. Confidentially is assured.
What key terms should I know?
Life Settlement: The sale to a third party of an existing life insurance policy belonging to someone who is age 70 or over and is in generally good health for their age. The sale is for more than the policy’s cash surrender value but less than its net death benefit, and represents the policy’s fair market value.
Viatical Settlement: The sale to a third party of an existing life insurance policy belonging to someone who is terminally or chronically ill. The sale is for more than the policy’s cash surrender value but less than its net death benefit, and represents the policy’s fair market value.
These terms are not used in a consistent manner by all states. For example, some states use the term “Viatical Settlements” to refer to the sale of all life insurance policies, regardless of whether the insured is terminally ill, chronically ill, or not. And at least one state uses the term “Life Settlements” to refer to all transactions, including ones in which the insured is terminally or chronically ill.
What’s the major difference between the “surrender value” and the “Life Settlement” fair market value?
In two words: additional cash. The fair market, Life Settlement cash value, may be significantly greater than the cash surrender value stated by your insurance company.
Does my state regulate Life Settlements?
Life Settlements are regulated by state insurance departments. Some states have enacted statutes addressing the sale of life insurance policies. Other states do not regulate the transactions. Of those states that regulate the transactions, most require both the Viatical/Life Settlement Broker (facilitator of the transaction) and Viatical/Life Settlement Provider (purchaser of the policy) to be licensed.
Why is it important to know the fair market value of my life insurance policy?
Knowing the fair market value of any asset — whether it is real estate, personal property, life insurance, or any other type of investment — enables informed decision making. Before selling any asset, including your life insurance policy, it can be financially prudent for you to seek an appraisal of the fair market value.
What if I have additional questions?
Contact us for more info.
How Do I Find a Trusted Life Settlement Broker?
Because Life Insurance Settlements are a relatively new financial service, it is important to find a legitimate broker and to understand the application process.
A powerful financial transaction, Life Settlements can greatly help many retirees. The Wall Street Journal and other publications have endorsed the benefits of Life Settlements. Model Regulations for Life Settlements have been developed by the National Association of Insurance Commissioners (NAIC) – but not all states or brokers follow these regulations. And, this is a new and emerging product and some Life Settlement companies have been accused of fraud.
Furthermore, not all Life Settlement brokers will negotiate the same settlement – some will be better at getting higher offers.
Checklist for Choosing the Best Life Settlement Broker
When choosing a Life Settlement broker, here are some criteria to help you find a legitimate broker who will be able to negotiate the best possible settlement:
- Transparency in the Transaction: A Life Insurance Settlement broker should educate you and keep you informed of every step and fee in the transaction. Your broker should be willing to tell you who the buyers are and show you all offers in writing.
- Competitive Bidding: Make sure that your policy will be bid on by as many qualified institutional buyers as possible to insure that you get the best offer. Some Life Settlement brokers sell to only one or two parties. However, by having multiple institutions bidding on your policy, you are more likely to get higher – more competitive offers.
- Competitive bidding is a particularly important feature since you will be working with only one Life Settlement broker. A good broker will be marketing your policy to all of the top buyers.
- Institutional Funding: While the situation is improving, fraud has been a problem in the Life Settlement industry. One way to protect yourself against fraud involving a life settlement funder is to make sure that your Life Settlement broker is dealing exclusively with large institutional investors – who (by their very nature), are experienced risk and case managers.Conceivably, anyone with adequate funds could purchase your life insurance policy. However, a legitimate broker should only be shopping your policy to institutional investors with the experience and funding to insure anonymity and privacy.
- Licensing: Understanding where and how a broker is licensed is important. You should only work with a licensed company, but beware – not all licensing guarantees a legitimate broker. There are no national or federal regulations for Life Settlement products – only state licensing. And, some states will give licenses to anyone who pays a fee while other states have little experience with this type of product and do not have very detailed requirements.
- Privacy Protection: Contracting for a Life Settlement entails sharing personal data. It is very important that you are sure that all of your personal medical and insurance policy information is obtained with appropriate, signed authorizations and you should be assured that this data will only be used for purposes of the Life Settlement transaction.
- Errors and Omission Insurance (E&O Coverage): E&O insurance is a type of insurance carried by most qualified financial organizations. A broker with a bad record may not qualify for this type of coverage. You should make sure that your broker carries E&O insurance. You can even ask to see their certificate.