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on LIFE SETTLEMENTS
from INSURANCE NEWSNET MAGAZINE
LIFE SETTLEMENT INFORMATION
Provided by MARILYN FARBER JACOBS
Licensed Advisor/Insurance Agent
561-988-0070 • marilynfjacobs@gmail.com
A Life Settlement allows seniors to receive cash in return for their life insurance policy. Almost any type of life insurance policy can be sold. (Term, Whole Life or UL). A study published by Conning and Company, an insurance investment and research firm, found that more than 20% of the policies on insureds age 65 and over have a fair market value in excess of their cash surrender value.
A secondary market has emerged and there are new alternatives to "cashing in" your life insurance policy. Lapsing a term policy is NOT the only option now when a policy is no longer wanted. Ask Life Insurance Agent MARILYN FARBER JACOBS to get you a "Policy Evaluation" and see what large institutional investment companies will offer for that policy.
Often, you can take an older policy not performing up to the expectations of the policy holder and use the settlement money to purchase a new paid up lifetime guaranteed premium policy.
When to consider a Life Settlement?
· When the insured is 65 years of age or older
· When a policy is lapsing or being surrendered
· The policy is no longer needed or wanted
· Premium payments have become unaffordable
· When there is a need for new life insurance.
· To pay for healthcare costs
· Change in estate planning needs
· When the insured has outlived the beneficiaries
· When there is a change in the health status of the insured.
· When the Client may have outlived the risk insured against
· Spouse has passed away
· Business partnership has dissolved
· Key employee has retired after a long career
Ideal candidates for life settlements
Clients age 65 and over with:
A life insurance policy with a face amount of at least $250,000 (can go down to
$25,000)
A adverse change in health since the original life insurance policy was issued
Life expectancy of 15 years or less.
Do you know the fair market value of you life insurance policies?
Example:
A 75 year-old man had a $4 million policy that was not performing up to expectations. His insurance agent recommended that the policy be appraised. The market value of his policy was $755,000, which was over four times its cash surrender value. The client decided to sell the policy and use the proceeds to fund new, more cost-efficient insurance. The new policy had a face value of $4.3 million and significantly lower ongoing premiums.
In other cases, investment projections may have proven unduly optimistic in the
current low-interest environment. So-called "vanishing" premiums have not
vanished, and the financial plan built around the policy is not being met. In any
such case, the owner may want out of his policy, either to move the value into
another asset or to buy a more efficient insurance policy.
How do you get started?
The life settlement process begins with filling out a Valuation Application that determines the market value of a life insurance policy. Here is how the process works:
· A completed Life Settlement Valuation Application and authorization is
submitted along with carrier illustrations and medical records for the last five years.
· Agent Marilyn Farber Jacobs finds the policy value to determine if an offer can be made.
· Agent Marilyn Farber Jacobs relays the offer to you and recommends that you check it out with your tax advisor and/or attorney.
· Once an offer is accepted, Agent Marilyn Farber Jacobs provides closing documents.
· After receiving the executed closing documents, change of ownership and
beneficiary forms are sent to the life insurance company.
· Upon confirmation of the change forms being processed, funds are released to the policy owner according to the terms of the executed contract.
If you would like a complete review and valuation of your life insurance policies, call Marilyn Farber Jacobs (561-988-0070) for a confidential free consultation. Marilyn is a Licensed Advisor/Independent Insurance Agent who will have the portfolio evaluated, and has many contacts who will quote on Life Settlement cases.
According to the November 2009 issue of Insurance News Net Magazine, re Life Settlements, a recent Newsday column stated, "If you need the policy´s worth in your lifetime and your heirs don´t need the money, a Life Settlement could be a life saver." The Magazine´s Executive Editor wrote that, "Now life insurance, the products that were sold to them [policy holders] to ensure their family´s financial safety, can provide for the insured´ own security. They can sell their policies for many times their often-meager cash value rather than keep up with premiums they might not be able to afford."
Here are quotes from the article in that issue mentioned above, "Are Life Settlements the $170BB Elephant in the Room":
- "About $10BB in insurance face value is settled annually, but analysts say more than $170BB in policies qualify for settling. That means the ceiling for sales I much higher than many might realize."
- "The life policies that seniors expected to either surrender for low cash value or let lapse became one of the few assets they can profit from."
- "Settlements typically pay three to four times the cash value, usually 15 to 20 percent of the policy´s face amount."
- "Some companies are already tying life settlements and LTC (long term care)."
- Most guesses peg the [life settlement] market at $2BB in 2002, growing to less than $12BB in 2008."
Be sure to consider tax issues as states can differ on those rules. Further, the article states, "States are establishing standards and even endorsing settlements, drawing life settlements out