Why are Life Settlements so popular?
More Insureds qualify for Life Settlements than the other 5 Programs combined. Funders are now buying cases when the Insured might live as long as 23 years. With the minimum age has dropped to 60, and the smallest policy is $100,000, more Insureds qualify for this program than ever.
Which other Programs compete with Life Settlements?
Alternative 1: The Retained Benefit Life Settlement is an important option for Policy Owners who want to provide some death benefit without paying any more premiums. If immediate cash is also desired, the benefit would be reduced. Funders do their best to meet the Policy Owner’s goals. Qualifications are the same as with traditional Life Settlements: minimum age 60, maximum lifespan 23 years, and smallest policy $100,000. Not all Funders offer Retained Benefit Life Settlements but our company works with the ones who do.
Alternative 2: The unique Long-Term Care Life Settlement has no age limits and accepts policies as small as $10,000. The Insured must be receiving some form of licensed Long-Term Care or may need some within 90 days, including but not limited to In-Home Nursing/Health Care, Assisted Living, Alzheimer’s/Memory Care, Skilled Nursing Facility, and Hospice Care. The Funder buys the policy, pays premiums, and converts part of the death benefit to a trusteed tax-exempt Long-Term Care Benefit Account which has no exclusion periods or contractual payout limitations. There will always be a Final Expense Benefit even if the LTC Account has been exhausted. The transaction is Medicaid-compliant and tax-exempt. Read more at Long-Term Care Life Settlements.
What if the Insured might live longer than 23 years?
American Life Settlements accepts cases that appear to have a chance of success. If the combination of health, age, type and size of policy, and gender makes it very clear that the Insured will very likely far beyond 23 more years, we will decline to take the case at this time. We explain why in as much detail as requested and suggest recontacting us if a material decline in health occurs or a year has elapsed.
Do Life Settlements require an attending physician’s statement of the Insured’s probable lifespan, as does a Viatical Settlement?
No physician’s statement about probable lifespan is needed with a Life Settlement. The tax-exempt Viatical Settlement requires a HIPAA-compliant statement that the Insured may reasonably be expected to die within 24 months or less. Policies with the tax-exempt Accelerated Death Benefit feature typically require a physician’s statement that the Insured will probably die within 6 months or less, though some carriers will approve an Accelerated Death Benefit Claim if the physician’s estimate is 12 months or less of probable life.
What about Survivorship (Joint Life) policies?
Survivorship policies are underwritten on the healthier of the two Insureds. Historically, it has been more difficult to transact the sale of Survivorship policies because the healthier Insured is typically a female younger than the male. Some Funders have discontinued bidding on Survivorships. As with Retained Benefit Life Settlements, we know and work with Funders that buy Survivorships. A lot of Survivorship policies are expected to be sold if the Federal Estate Tax is eliminated or dramatically reduced in any Tax Reform legislation that is signed into law. Such sales are anticipated because the Federal Estate Tax is the primary reason why couples buy Survivorships. That said, a number of States still have Estate and/or Inheritance taxes, so some Survivorships may still make sense.
What is the technical definition of a Life Settlement?
A Life Settlement is the sale of a life insurance policy to a third-party institutional investor for more than its cash surrender value, but less than its net death benefit. The Policy Owner transfers ownership of the policy in return for a single cash payment. The buyer pays all future premiums and receives the death benefit upon the Insured’s death.
