If you wish to know whether your life insurance policy is worth more than you think it is, you may want to explore the option of a life settlement. Those who no longer need or want to pay premiums on their life insurance policy typically have two alternatives: surrender it for the cash value or allow it to lapse. However, a life settlement may provide an attractive alternative as it allows policy holders to sell their in-form life insurance policies for an amount greater than the current cash value of their policies.
Some advantages of possible life settlement solutions include receiving fair market value for your life insurance policy, the flexibility in the financial planning process, relief of ongoing premium obligations, or higher payout than the cash surrender value.
There are, however, many factors in determining whether a life settlement makes sense for your financial goals. Consider the following questions:
- Are you a good candidate?
- When should you consider a life settlement?
- What are the advantages?
- What are the drawbacks?
- What are the implications to the rest of your wealth strategy?
- Are the other alternatives worth considering instead?
If you would like additional information, to these and other pertinent questions regarding life settlement solutions, Plante Moran Insurance Agency can provide an objective analysis of your insurance strategy and assist you in obtaining more information. As with all financial instruments, great care needs to be given to this and other investment vehicles and how they integrate with your ultimate financial goals and risk tolerance. These should be considered as part of an overall holistic wealth management strategy for you and your family. PMIA’s insurance experts can help you investigate all of your options for life settlement solutions, and help you to make an informed decision.
In a life settlement agreement, the current life insurance policy owner transfers the ownership and beneficiary designations to a third party, who receives the death proceeds at the passing of the insured. As a result, this buyer has a financial interest in the seller’s death. When an individual decides to sell their policy, he or she must provide complete access to his or her medical history, and other personal information, that may affect his or her life expectancy. This information is requested during the initial application for a life settlement. After the completion of the sale, there may be an ongoing obligation to disclose similar and additional information at a later date. A life settlement may affect the seller’s eligibility for certain public assistance programs, such as Medicaid, and there may be tax consequences. Individuals should discuss the taxation of the proceeds received with their tax advisor. ValMark Securities considers a life settlement a security transaction. ValMark and its registered representatives act as brokers on the transaction and may receive a fee from the purchaser. A life settlement transaction may require an extended period of time to complete. Due to complexity of the transaction, fees and costs incurred with the life settlement transaction may be substantially higher than other securities.
Plante Moran Insurance Agency is a member of the FINRA. Securities are offered through Valmark Securities, Inc., an unaffiliated securities broker-dealer. Member FINRA and SIPC.
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