Monday, 16 February 2015

FAQ on online Insurance policy

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Who can qualify?
A potential candidate for a life settlement is typically aged 65 or older; has a life insurance policy with a face amount of at least $250,000, and has a life expectancy greater than 2 years

What type of insurance policy can be sold?
Most types of life insurance policies can qualify as long as they've been inexistence for more than 2 years. However the most common are Universal Life, Whole Life, Variable Life, Survivorship Life, and convertible Term Life..


What happens to my policy?
A life settlement transfers ownership of your policy to a third party investor that only has a financial rather than an insurable interest in your life. In other words, the death benefit will eventually be paid to the new owner. Once you sell your policy you give up all rights and obligation to the investor in exchange for the sale price. The buyers are usually institutional investors such as pension funds, charitable endowments, universities, and hedge funds.

What can the money be used for?
You can spend the money on whatever you like. Some people use it to fund other investments, make charitable donations, fund a relative's education, or even purchase replacement life insurance

What are the fees? Be aware that the commissions on life settlements can be as high as 33%.These commissions are negotiated between the advisor and the purchasing company, but are not always disclosed to the client. Make sure your advisor clearly states their cut. Most commissions hover around 8% of the net death benefit or 30% of the offer price, whichever is less

Other than commission there is no other fee. You can put your policy out forbids and decide whether or not you will accept a bid or turn it down. The whole process takes about 4 months

Do I have to take a bid if I don't like it?
Never! There is absolutely never any obligation or fees if you don't want to accept the bids for your policy. It is free to put your life insurance policy out forbid just to see what it's worth in the life settlement market.
What are the tax implications?
A life settlement is generally a taxable event.
- The portion of the policy owner's investment (premiums paid) will be received tax-free.
- The difference between the premiums paid and the net cash surrender value will be taxed as ordinary income.
- The portion exceeding the net cash surrender value will be a gain, in most circumstances a capital gain.

Since every situation is different it is important that you consult with your tax advisor when contemplating selling your life insurance. Life settlement brokers are not tax consultants.
Important Considerations

Life settlements can be a wonderful source of funds. But they are not for everyone. You must consider whether you still have a need for continued coverage. If your premiums are too expensive you may be able to lower your amount of coverage and keep your current policy by exercising a non-forfeiture option. If after the life settlement, you plan to replace your existing policy with another policy there may not be any other availability or comparable coverage for less cost. You must assess your circumstances, including financial need, investment objectives, tax consequences, and other relevant implications of selling a policy.


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