If you are having difficulty understanding your life settlement policy, reading this article is a great first step. We will touch on the questions you should be asking and what you need to know in order to be a smarter policyholder.
What Is A Life Settlement Policy?
A life settlement policy is the sale of a life insurance policy to a third party for a value in excess of the policy’s cash surrender value, but less than its face value, or death benefit. Letting a policy expire means losing everything it is worth. Cashing it out often nets the policyholder very little money. A life settlement allows a policyholder to sell their policy for its true worth.
With a life settlement policy, policy owners receive a cash payment for their policy and the third party that buys their policy then assumes all future premium payments and receives the death benefit upon the death of the insured.
Typically, the ideal candidate for a life settlement is someone who is 65 years or older and owns a life insurance policy with a face amount that exceeds $100,000, but if you are a life insurance policyholder who does not fit these criteria, we recommend that you contact Accelerated Life Solutions to evaluate your eligibility.
The Life Settlement Market
Before the life settlement market came to be, policyholders looking to sell their life insurance policies had very few options, all of which did not provide much economic value. So, if you, the policyholder, no longer wanted, needed or could afford your policy, you were typically out of luck.
Understanding The Life Settlement Process
Who Should You Trust To Buy Your Life Insurance Policy?
When you begin to consider selling your life insurance policy, it is best to consult a professional first. Whether it’s your financial planner, advisor, attorney, trustee, wealth manager, etc. These individuals are your first line of defense when it comes to deciding if entering the life settlement market is the right move for you and your life insurance policy.
When you make Accelerated Life Solutions your entry point into the life settlements market, we will work closely with you and your designated professional to navigate the life settlement market and get you the best price for your life insurance policy.
How the Life Settlement Process Works
The process isn’t always simple, but working with Accelerated Life Solutions make it easy to get the best price for your policy. At Accelerated Life Solutions, we take care of all the work. Our process begins with a no-cost evaluation of each client which then allows us to determine whether or not a life settlement is in your best interest.
In general, the following are steps that are typically involved in the life settlement process go as followed:
- The initial discovery that you might want to sell your life insurance policy.
- Find representation to serve as your entry point to the life settlement market.
- The current policyholder has to fill out an application disclosing medical background amongst other things.
- Your life settlement market representative submits your medical records to be reviewed by a third party life expectancy company to underwrite your application.
- Potential providers/buyers analyze the market value of the policy, considering a variety of factors.
- Life settlement provider or buyer will either decline your application or extend you an offer to purchase your policy. As the policyholder, you have the option of accepting or declining an offer.
- A purchase and sale agreement will be prepared as well as other documents formalizing the transaction. When both the buyer and seller accept and sign the offer, the funds for the settlement transaction are then placed in an escrow account.
- Your insurance carrier is notified of the change of policy ownership and beneficiary to the new owner.
- Your escrow agent transfers settlement funds to the seller of the policy.
Now that you have a better understanding of the process, talk to your life insurance agent or financial advisor about moving forward! If you have any questions about the settlement process or how to get the best price for your life insurance policy, contact Accelerated Life Solutions today!