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This situation may not be suited for everyone... There is a considerable amount of insurance each year that either lapses or is cash surrendered.
For many agents, a Life Settlement may be a new resource. The following are some questions and answers to related issues.
Please click on the question to view the answer.
- Life Settlement: what are they?
- Under what conditions should my client consider selling his/her life insurance policy?
- Are the proceeds from a Life Settlement tax-free?
- How difficult is the application process, and what is the length of time for an approval or a denial?
- What about confidentiality throughout the process?
- What about my client’s life insurance beneficiary(ies)?
- Who does allsettled represent?
- What if my client changes his/her mind about selling their policy after receiving the payment?
- Are there any regulations for this benefit?
- What should my client and I look for in a Life Settlement Company?
- Should my client consult other professionals during the decision making process?
- How do I get an application form for my client or more information from allsettled?
- Is my client required to buy additional life insurance to do this?
- Need my client be terminally ill to sell their life insurance policy?
- Is my client restricted in any way in their use of the proceeds?
- What are the types of life insurance policies my client can sell?
- Are there limits to the policy amount my client can sell?
- Does my client have to sell his/her entire policy?
- Who should consider investing in this industry?
- Premiums: who pays?
Q: Life Settlement: what are they?
A: A Life Settlement allows a person, usually 65 years or older, to sell their life insurance policy for cash before it expires or lapses. Moreover, it allows Seniors the opportunity to liquidate an asset which has already served its purpose and provides an opportunity for asset reallocation.
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Q: Under what conditions should my client consider selling his/her life insurance policy?
A: Here at allsettled we understand that every individual’s needs are unique; however, the following situations are some examples of when your client may consider selling an existing life insurance policy:
Selling their business
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The policy they purchased to finance a buy/sell agreement is no longer needed after the business has been sold .
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The business owns a key-man policy that is now unnecessary because of a change in ownership.
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Charitable Organizations
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A not-for-profit organization can sell a gifted policy to supplement its current cash flow.
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Reexamining Corporate-Owned Life Insurance (COLI)
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The business owns a Key-man policy on an executive who is no longer employed. |
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A change in tax law has made some leveraged COLI programs uneconomical. |
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The company owns policies purchased to fund deferred compensation or retiree benefit programs, after such programs have been changed. |
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Addressing Changes in Your Client's Estate Planning Needs
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Your client's estate size has been decreased or tax considerations have changed, reducing the insurance required to pay projected estate taxes. |
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Your clients have had a change in their financial condition, and the premiums on their policy are no longer affordable. |
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Your clients have outlived their family or beneficiaries. |
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Q: Are the proceeds from a Life Settlement taxable or tax-free?
A: Of course, your clients should always seek the advice and council of tax professionals, but general opinion is that the purchase and sale of a life insurance policy is no different than the purchase and sale of many other assets.
However, if the insured is terminally ill, there may be favorable tax treatment.
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Q: How difficult is the application process, and what is the length of time for an approval or a denial?
A: The process with allsettled usually takes four to six weeks from application through the closing until receipt of the settlement. Your client completes a short information form and provides permission for release of their medical records and insurance records to allsettled. There are no medical exams or invasive interviews required.
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Q: What about confidentiality throughout the process?
A: allsettled is committed to maintaining the confidentiality of medical and other confidential information.
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Q: What about my client’s life insurance beneficiary(ies)?
A: The policyowner makes a decision to sell the policy with the knowledge, approval and unconditional consent of the beneficiary. With the money received from the sale of an insurance policy, the Senior might consolidate debt, take a well deserved vacation , enhance their quality of life or the quality of life of their beneficiaries. The cash from the sale of their life insurance policy can provide a way for them to give their loved ones and friends things that they never thought they could afford. Whatever reason or reasons they may have for selling their life insurance policy - whether it is having the financial security of available cash to pay unexpected bills, or gaining the peace of mind knowing no more policy premiums have to be paid - allsettled provides a new financial resource for them and you to consider.
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Q: Who does allsettled represent?
A: In states with no requirements, we represent the buyer or funder. In states that require us to represent the seller or the buyer, we follow the requirements of those states.
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Q: What if my client changes his/her mind about selling their policy after receiving the payment?
A: Your client has a period of time after receiving the funds to change their mind. During this time period they may request that the policy ownership revert to the original owner and upon return of the funds, the policy is converted to the original owner.
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Q: Are there any regulations for this benefit?
A: The Departments of Insurance of many, but not all, states require licensing of providers as well as insurance brokers.
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Q: What should my client and I look for in a Senior Settlement Company?
A: High commissions paid, stability, experience and professionalism are the keys to judging a company. allsettled is committed to providing resources to those agent and their clients who wish to liquidate an otherwise illiquid asset on a timely basis in a professional manner: meaning maintaining impeccable patient record confidentiality.
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Q: Should my client consult other professionals during the decision making process?
A: Consulting with their accountant or tax advisor, a lawyer or estate planner may provide specific information about the potential financial and tax consequences of using this resource. A financial planner may offer information about methods for maximizing the funds received from this benefit for your client and for their family’s future.
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Q: How do I get an application form for my client or more information from allsettled?
A: Simply click on e-mail and provide us with your name and address where we can send the application form and more information or you can go to the Contact Us link for our phone number and one of our representatives will be happy to assist you.
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Q: Is my client required to buy additional life insurance to do this?
A: No, your client does not have to buy anything to enjoy the rewards from the sale.
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Q: Need my client be terminally ill to sell their life insurance policy?
A: No. allsettled purchases life insurance policies from Senior individuals that are not terminally ill.
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Q: Is my client restricted in any way in their use of the proceeds?
A: No. The proceeds can be used for any purpose. Here are some of the options you may want to discuss with your client:
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Fund the purchase of a survivorship policy |
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Buy back stock from a partner or stockholder |
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Purchase additional securities, mutual funds or annuities as long-term investments
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Pay for long-term care insurance or other asset protection tools |
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Fund a charitable gift, charitable lead trust, charitable remainder trust or gift annuity
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Q: What are the types of life insurance policies my client can sell?
A: Your client can sell any type including whole life, universal life, term, conversions from term to permanent life insurance and/or portable group life insurance policies.
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Q: Are there limits to the policy amount my client can sell?
A: No. Our typical Senior Settlement policy has a minimum death benefit of $50,000. We have no limit to the face amount of a policy that allsettled will accept.
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Q: Does my client have to sell his/her entire policy?
A: No. Whatever portion of their policy they choose to sell can be purchased while they keep the remaining death benefit in the name of the original beneficiary or whoever they may designate.
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Q: Who should consider investing in this industry?
A: Qualified institutional investors should click on email and provide us with your contact information.
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Q: Premiums: who pays?
A: The purchaser of the policy assumes all premium obligations.
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