Most Americans are still unfamiliar with life settlements. For those that have heard of the practice of selling an existing life insurance policy, there are a number of common misconceptions about the relatively new transaction. These misunderstandings too often bias or prevent people from exploring the option that could potentially offer a great financial benefit.
Life insurance policies were originally purchased as viaticals from AIDS and other terminally ill patients in the 1980’s and 1990’s. However, the majority of life settlements now involve healthy seniors. Purchasers do not require or even target ill insureds. Insureds need not be in poor health to have a life insurance policy qualify for a life settlement transaction.
Many believe they will have to undergo extensive medical exams or lengthy doctor visits in order to participate in a life settlement. This is not true at all. Even though the purchase of a life insurance policy often involves a medical exam, selling an existing policy does not. Typically a life settlement broker will request an insured’s existing medical records from their doctor or health care practitioner. The records are then reviewed by medical actuaries that establish an estimated life expectancy. All of this happens without any work or effort from the insured.
Some people think that a policy must have extensive cash value to be sold in a life settlement. The more cash value built up in a policy, the more difficult it becomes to sell it. Life settlements are attractive to sellers when they offer sales prices in excess of the cash value amount. The economics of the transaction are difficult to make work if a policy has too much cash value. Life settlement buyers favor policies with little or no cash value accumulated in the policy.
Life settlements are really much easier than most people think. The key is to find a good life settlement broker, who should do most of the work. Then sit back, relax and evaluate the offers for your policy.
Learn more about a life settlement. Stop by the blog devoted to the secondary life insurance market, The Life Settlement Monitor.
Tags: Cheap Life Insurance, finance, insurance, life insurance, life settlement, personal finance, retirement