LIFE SETTLEMENT FAQs

What is a life settlement broker?

A life settlement broker educates clients on the life settlement marketplace, prepares their case for market, and represents them in negotiations.  Their job is to help you find the highest offer for your policy while representing your best interests

 

Who does the broker represent in a life settlement contract?

A life settlement broker represents the seller in a life settlement transaction.  They create competition in the marketplace and negotiate on the seller's behalf to find the highest bidder. The buyer is represented by a life settlement provider.  

 

Is a life settlement a good idea?

A life settlement is a good idea in certain situations, while in others it may make sense to keep the policy.  As many as 85% of universal life policies do not end up paying a death benefit due to the policy lapsing or being surrendered, and a life settlement is likely to yield significantly more to the seller than lapsing or surrendering.  Depending on the needs of the owner, it may be better to sell the policy now, or hold onto it if they can afford it and need the coverage.

How much is a life settlement worth?

Life settlement amounts are largely based on the cost of future premiums and the life expectancy of the insured.  Some receive as much as 70% of the death benefit while others may only receive $5k - $10k.  Each case and value is unique.  Get a free appraisal to find out how much your policy might be worth.   

 

What are life insurance settlement options?

If the insured is still living, the owner of the policy may sell the contract to an investor for a cash settlement now, and relief of future premiums, known as a life settlement.  If the insured has passed, the carrier may offer a few settlement options including the lump sum death benefit, or level payments over a set period of time. 

 

What are settlement options?

A life settlement option is the opportunity to sell an existing life insurance policy to a 3rd party investor for a cash settlement.  If the insured has passed, the carrier may offer more than one method of receiving the death benefit including a lump sum payment or level payments over a set period of time. 

How much do you get for selling term life insurance policy?

If the term policy is convertible to universal life, and the cost of premiums are reasonable, many healthy 70 yr olds receive $10k to sell their term policy.  If the insured is unhealthy, they may receive significantly more.

How does selling a term life policy work?

The term policy typically needs to be convertible, and most policies are until a certain age or the end of the term.  The conversion deadline can be found by reviewing your contract or calling your carrier and asking.  If it is, we order a conversion illustration to a universal life product, and present that to investors with your medical records.  If it is determined that the policy is likely profitable, they will make an offer based on their projections and motivation.  Work with a life insurance broker to help bring your case to a wide variety of investors.

How much do you get when you sell a life insurance policy?

The value of a policy in a settlement is largely based on future premiums, the life expectancy of the insured, the death benefit, and the time value of money.  If an investor can make a reasonably annual interest rate back on your policy, they will make an offer based on these projections.  It is always recommended to get multiple offers on your policy to ensure you’re getting a good offer.  Work with a life settlement broker to help you find the highest bidder.

Is it legal to sell your life insurance policy?

Yes.  The Supreme Court passed a law in 1911 which allowed for the transfer of ownership of a life insurance policy to a 3rd party.  Today, a life settlement contract must be done through a licensed life settlement provider to ensure legal due diligence is done correctly via the expectations of the department of insurance in each state. 

 

Can you ever cash out a life insurance policy?

There are multiple options to cash out a life insurance policy depending on the contract.  If the insured is age 65+ and the death benefit is $100k+ they may be able to cash out by selling it to a 3rd party investor.  Permanent life insurance policies typically have a surrender value as well, though a life settlement may yield a larger cash payment.  Work with a life settlement broker to test the market.