Don’t Let Your Life Insurance Policy Lapse. Turn it in to a Settlement and Get Your Money Now.

Thousands of people each day let matured life insurance policies get surrendered back or lapse leaving them with a terrible investment with nothing to show for it. Turn that policy into money now and see what a life insurance settlement can do for you.

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Life Insurance Settlement – The Flexibility To Do More

Many people over the years acquire life insurance for themself or someone they love in the event of a tragedy. At the time you get the best policy for your income and needs but it is difficult to know what twists and turns life will take so your life insurance needs can often change. Then what do you do? Some people get new policies that overlap, some don’t even remember having the policy until they need to, and others sell their life insurance policy. We’re here to unwrap the ins and outs of a life insurance settlement for anyone interest in cashing in their policy and getting money in hand to do what they wish.

Here’s some great industry information about life settlements that is worth looking at (click on the image to zoom):

market-graph1

(photos courtesy of www.buildingarks.com)

Life Settlement – What is it?

When you sell an existing life insurance policy to a 3rd party for greater than its cash value but less than its net death benefit, that’s called a life settlement This is not to be confused with a viatical settlement. Viatical settlements are similar but they are when a person sells their policy due to a terminal or chronic illness. Policy holders learn about selling their policies often times from a financial planner/advisor, attorney, insurance broker, relative, etc. but this information will hopefully provide you with the right answers to make your life settlement right for you. Although life insurance policies have been around for hundreds of years it was only after a Supreme Court ruling in 1911 that life insurance policies could be sold, transferred, borrowed against, or even used as collateral. Now life insurance settlement gives policy owners the flexibility to cash out in the event they need money for unexpected expenses, for a large purchase, to invest, or to get a new policy.

Now most insurance companies (like Coventry, Magna, GWG, Conestoga and New york Life) do allow their customers to “surrender” their policies. But this typically means the policyholder is offered a small fraction of the face value of the policy, and by small we mean 3-5% small. They also will typically neglect to inform their customers that they can get a much better payout on their open policy through a life settlement. Hopefully this website will be a helpful resource for you to explore your options and see how your insurance company can work with you or a broker to get you a settlement that is right for your needs instead of just turning over your existing policy in exchange for a few magic beans.

Special Thanks to lisa.org the website for the Life Insurance Settlement Association for statistics and data.

Here are some interesting statistics regarding the life insurance industry:

As of 2005, 90% of all policies either lapsed or were surrendered according to the Insurance Information Institute.

93% of Americans think life insurance is necessary but only 63% of them have life insurance and only half of those that do, have adequate coverage.

Who Typically Gets a Life Settlement?

In many cases for a life insurance settlement it’s a senior that has already had a significant investment into his/her policy but has now come to the realization that the policy no longer meets their needs or they would like to take that money and invest in something else or a more appropriate policy. Typically this is someone 70 years of age or older, so life circumstances have changed significantly from when their insurance provider settled on that particular option. Empty nesters, retirees, and seniors transitioning to assisted living facilities suddenly find themselves with a more structured set of life needs and want to make sure their available funds can meet those needs now and in the future. Many seniors that find themselves single again after a loss of a spouse have also used this option to reorganize their assets as per the recommendation of a financial planner, brokers, or even a family member helping with investment opportunities.

What’s the Life Settlement Process?

There are many processes and procedures to get through in order to get a settlement on a life insurance policy that we will cover and although it can be confusing, with the right help you can be holding cash in your hands in as little as 60 days. Now typically the timeline is 60-120 days but your individual investing consultant can walk you through how to expedite the process from contracts to cash. Different settlement providers can walk you through the steps and what is right for you but for most the following graphic shows the steps involved.

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Once you’ve realized the need to sell your policy you will be required to fill out your application to a settlement company for review. Typically that settlement company will ask for additional documentation to verify certain key attributes and review your case for accuracy, potential fraud, and viability. Upon completion of those steps the settlement company will determine if it’s suitable for funding and what the appropriate settlement and payment would be and then make you and offer. Here’s where you are at the crossroads of what to do. If you decline the offer, the case is closed and you move to potentially a new provider. If you accept the offer, you receive a closing package for review and signatures, the documents are forwarded to your life insurance carrier, and upon verification of ownership transfer, the funds are transferred into escrow for the settler. As you can imagine some of these steps could take weeks so patience and choosing partners that will work with you are critical. Also, make sure you look over your contract closely, grab your calculator, look at your other investments, and look at all of your possible solutions. It’s better to settle your policy now and get cash in hand to fund other investments than letting it lapse or get surrendered leaving you a statistic in an unhappy news report.

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