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What is a Life Settlement? |
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A financial tool used by senior policy owners and financial advisors applied to life insurance creating money in excess of cash surrender value. |
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Why Would Someone Consider a Life Settlement? |
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- Reduce or eliminate future life insurance premiums on a more beneficial
life insurance policy.
- Create more comfortable retirement years
- Fund new needed Annuities, Life Insurance, Long-Term Care or
Investments
- Fund the purchase of a needed survivorship policy
- Fund a single premium life insurance policy
- Settle personal or business debts proactively
- Bestow cash gifts to family members or charities
- Maintain a lifestyle despite changes in finances or health
- Activate income from an inactive asset
- A more profitable alternative than surrender or lapse
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What Types of Policies are Considered? |
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Almost any type of life insurance…
- term
- universal life
- whole life
- survivorship
- key-man
Owned by...
- an individual
- trust
- corporation
- charitable organization
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How Much Will I Receive for My Policy? |
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There are many factors that determine the offer amounts:
- Age
- Premiums
- Client's health
- Type of policy
- Insurance company rating
- Policy size
- Competitive bidding
As a general rule: age, health and future premiums are the primary factors that determine the amount of the Life Settlement offer. |
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How Long Does it Take? |
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The offer process can occur within four to six weeks. If you accept the offer, you normally see payment within one month - approximately one to two months total from the time of qualification to receipt of proceeds. |
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Is There Any Obligation? |
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There is no obligation to accept a Life Settlement offer. |
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What If I Change My Mind? |
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Most Life Settlement transactions have a 15-day rescission period. This depends on any state regulations governing recession periods on this type of transaction. |
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Are the Proceeds Taxable? |
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As with all financial decisions, you should consult a professional tax advisor. In general, the proceeds are:
- Tax free up to the amount invested
- As ordinary income up to cash surrender value
- Taxed as capital gains above cash surrender value
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