(501) 404-0000
team@evolvedsettlements.com
- (501) 404-0000
- team@evolvedsettlements.com
(501) 404-0000
team@evolvedsettlements.com
In a life settlement, you sell your life insurance policy in exchange for a cash payment.
The buyer pays you a lump sum for your policy.
Buyers of life settlements are called providers. They take over the premiums and receive the death benefit when you pass away.
A life settlement broker screens your policy to see if you qualify. Should your policy qualify, the broker will start the process of building a file to take your policy to the providers for an auction.
Next, the broker will obtain a signed release from the insured to gather their medical records needed to proceed and the broker will gather information on the performance of your existing policy.
Each buyer then calculates the value of your policy. The factors that determine the lump sum they pay include:
You may receive multiple offers. You decide which one to accept. If none are suitable, you can refuse all of them.
Should you choose an offer, you then transfer the policy to that buyer. The buyer becomes the policy’s beneficiary upon transfer.
In return, the buyer puts your lump sum into an escrow account. You receive the money once the transfer of ownership is complete.
Based on lisa.org “Most life settlement transactions take, on average, from four to five months to complete.”
In order to qualify for a life settlement, certain criteria must be met. Typically, to sell your policy you must:
However, criteria can vary. For example, a few life settlement companies accept policies with death benefits as low as $50,000. To know if your policy qualifies, contact Evolved Life Settlements directly.
There are many reasons why people sell their policies (Investopedia). You might consider selling your policy if you:
You may have more than one reason for selling your policy. For example, you may no longer need the policy. At the same time, you may need funds to pay for long-term care.
Your life insurance policy is a financial asset – one that can be sold for cash. Find out what it's worth today!
Cash for Expenses
A life settlement can provide cash for expenses. Since the money belongs to you, you can choose to spend it how you wish. For example, the money can be used to pay for medical expenses or cover your mortgage.
You Stop Paying Premiums
A life settlement can help if you are struggling to pay your premiums. Along with receiving a lump sum, you can stop paying your premiums once the sale is complete.
This can make sense if you no longer need your policy. You save money from not paying premiums. You can use the amount you save to fund other needs in your life.
Your Proceeds May Be Taxed
Some or all of the proceeds of a life settlement may be taxable under federal income tax, state franchise tax, state income tax laws, and/or other tax laws, so you should seek assistance from a professional tax advisor before completing a life settlement.
You Can Be Disqualified for Some Types of Government Support
The proceeds from a life settlement can place you in a higher income bracket. This can mean that you may become ineligible for:
Medicaid
SSI
SNAP food benefits
Section 8 or HUD housing benefits
Each policy owner should consult their own tax advisor for the impacts of receiving proceeds from a life settlement.
The most common life settlement options are traditional, viatical, and retained death benefit.
Traditional life settlements are the most common type of life settlement. You receive this type of settlement if you meet the criteria described above. You must also have a life expectancy greater than twenty-five months.
Viatical settlements are similar to traditional life settlements. The difference is that they are for those whose life expectancy is less than twenty-five months.
Viatical settlements typically pay more than traditional life settlements as a result of the shortened premium period the buyer expects to pay the premium and the expected collection of the death benefit within twenty-five months. Therefore, they are willing to pay more.
If you have a terminal illness, you may qualify for a viatical settlement.
You may also qualify if your life expectancy is greater than twenty-five months.
A retained death benefit (RDP) is when you sell a portion of your policy. You receive a smaller lump sum than if you were to sell the entire policy.
The buyer then becomes responsible for paying part or all of your premiums.
A portion of your policy’s death benefit goes to the buyer. The remainder passes to your beneficiaries.
A life settlement broker can help you with the process of selling your policy. To begin, they need to estimate the value of your policy. To do this they start by asking you some initial questions.
The four main factors they consider are your age, the type of policy, the current premium, and the amount of the death benefit. They also ask how long you’ve owned the policy.
Ideal candidates are aged 70 or older. Your policy may qualify if you are younger than 70 or have a serious illness.
Most buyers only consider policies with a death benefit of at least $250,000, but some will look at policies below $250,000. Life settlement providers need higher profits to cover their expenses.
Your policy can be a permanent life insurance policy or a term life insurance policy. This policy can be an individual or group policy.
Finally, the buyer needs to know how long you’ve had the policy. States require that a policy be held for a certain number of years before selling. Each state has its own requirements.
Next, you fill out a life settlement application. The application contains basic questions regarding you and your policy.
You also need to fill out a medical release form. The buyer needs your medical history for the past five years. The underwriter uses this information to calculate your expected lifespan. A shorter lifespan increases the amount a buyer will pay.
Finally, you complete an authorization form. This form goes to your broker. This allows them to confirm the details of your policy directly with your insurance company.
A life settlement broker presents your policy to multiple buyers. We call this an auction market.
This creates competition among buyers and helps you receive a higher price.
Your broker will then present the bids for you to review.
You usually have up to 14 days to review and accept a bid.
At this point, you may accept or decline any offer.
It is important at this point to determine if you would rather keep the policy or sell to a provider. We recommend reviewing your options with your trusted advisor.
Should you accept an offer, the broker informs the provider, and you will move forward with completing the closing package and underwriting review.
The buyer will conduct a formal underwriting review based on the information provided.
The buyer then sends a closing package to your life settlement broker. The documents included in the package depend on the state in which you live.
The package often includes three items:
You also have to sign documents changing ownership and the beneficiary to the buyer.
Once the buyer receives your closing package, they transfer your lump sum to an escrow account. An escrow agent verifies the documents you signed.
The buyer completes the transfer of ownership. The funds in the escrow account are then released to you.
Your life insurance policy is a financial asset – one that can be sold for cash. Find out what it's worth today!
Some or all of the proceeds of a life settlement may be taxable under federal income tax, state franchise tax, state income tax laws, and/or other tax laws, so you should seek assistance from a professional tax advisor before completing a life settlement.
Risks to consider include fees, taxes, and the needs of beneficiaries.
Your broker earns a commission for helping to sell your policy. Their fee is a percentage of one of the two most common values:
Percentage of the face value of the policy. The face value is the original death benefit. It does not include any outstanding loans against the policy.
Percentage of the sale price of the policy. Since the sale price is a much smaller amount than the face value, a higher percentage is used.
The percentage of broker fees ranges from 6%-10% of the policy’s face value or 30% of the offer.
For example, if your policy’s face amount is $500,000 and you receive an offer for $120,000, the fees could be calculated like this:
A broker usually charges the lesser of these two fees.
They would charge $36,000 for the sale of this policy, not $40,000.
As explained above, you may owe taxes.
The proceeds of a life settlement are almost certainly taxable. The assistance of a professional tax advisor should always be sought. The proceeds of a life settlement could also be subject to the claims of creditors. If the seller is within two years of death, other laws making the proceeds tax-free may apply.
lisa.org
A life settlement transfers ownership of your policy to another person or institution. This means your current beneficiaries lose the death benefit.
You should determine if there is a need to keep the life insurance policy to leave to your beneficiaries.
We recommend talking to the beneficiaries about the transaction. Including asking family members if they would like to assume the premium payments in future years on the policy.
Your life insurance policy is a financial asset – one that can be sold for cash. Find out what it's worth today!
A life settlement is when you sell your life insurance policy in exchange for a lump sum.
Buyers, also known as providers, pay you money for your policy.
You may qualify for a life settlement if you:
However, criteria can vary. For example, a few life settlement companies accept policies with death benefits as low as $50,000. To know if your policy qualifies, contact Evolved Life Settlements directly.
Yes, a life settlement does involve fees. The most common fee is a broker compensation fee.
A company known as a life settlement provider would buy your policy.
The company that buys your policy will either hold onto the policy and collect the death benefit itself or resell the policy to an investor.
Some or all of the proceeds of a life settlement may be taxable under federal income tax, state franchise tax, state income tax laws, and/or other tax laws, so you should seek assistance from a professional tax advisor before completing a life settlement.
Cash surrender value is the cash portion or equity of your policy, minus fees and loans.
The death benefit is the amount your beneficiaries receive when you die. The life insurance company is responsible for paying it.
Medical underwriters determine your life expectancy. They use your medical records, as well as statistical data to help them decide. The statistical data includes such details as age, gender, tobacco use, and the overall health of people who are similar to you.
These two types of settlements are similar. Each involves the selling of a life insurance policy for a lump sum.
A life settlement applies if you have a life expectancy of greater than twenty-five months.
A viatical settlement is for those who suffer from a terminal illness. To qualify, you must have a life expectancy of less than twenty-five months.
Life settlements pay more than the cash surrender value but less than the policy’s death benefit.
Buyers use various factors to determine how much to offer. They include your medical condition, the cost of premiums, and the amount of the death benefit.
They also consider other factors such as the rating of the issuing insurance company and current interest rates.
You do not pay the premiums once the policy sells. Your buyer becomes responsible for the premiums.
First, find a reputable broker. A broker can answer additional questions you may have and assess whether or not your policy qualifies.
You can also approach a buyer directly.
However, a broker has access to many buyers. They often get multiple bids for one policy. Therefore, they can usually get you the best price.
You can change your mind anytime during the process before the sale is final.
A life settlement includes a rescission period after the final sale. You can change your mind during this period. Consult your broker to confirm the recession period applicable to your situation.
One main advantage is the lump sum you receive. There are no restrictions on how you use the cash. You can use the money to fund other life expenses or pay for luxuries. It’s up to you on how you use the money.
Another advantage is that you can stop paying the policy’s premiums once the sale is final. This can save you money, especially if you no longer need the policy.
You may owe taxes on your life settlement.
A life settlement can also disqualify you for government benefits, such as Medicaid, SSI, SNAP and Section 8.
Also be aware that creditors may have a claim to your life settlement proceeds.
You should seek assistance from a professional tax and legal advisor before completing a life settlement.
In most cases, yes. This is especially beneficial if you have several smaller policies. You can bundle the policies together to meet a buyer’s minimum face amount, which is usually $250,000. However, criteria can vary. For example, a few life settlement companies accept policies with death benefits as low as $50,000. To know if your policy qualifies, contact Evolved Life Settlements directly.
There are no laws on how you use the proceeds. Beyond paying the required taxes, you can use the money however you want.
Your life insurance policy is a financial asset – one that can be sold for cash. Find out what it's worth today!
Helping you get the most value out of your life insurance policy.
Our goal is to maximize your policy value and obtain the highest bids available in the life settlement market. We do this by using our underwriting and product expertise to help you reach a higher policy valuation. This process allows us to help you negotiate the best options for you and your family.
We take a client-first approach and make sure we are doing what we can to maximize the value of your offers.
Contact the Evolved Life Settlements team to reach one of our trained staff members. We’ll help review any unanswered questions and help you begin the life settlement process.
If you would like to make an appointment, you can call our office directly at (501) 404-0000 or email our team at team@evolvedsettlements.com.
Complete the form below to contact us with any questions you may have.
