The Life Settlement Opportunity

A Life Settlement is the sale on an existing life insurance policy on a person with a shortened life expectancy between 2 – 15 years (age 65+); to an institutional investor for an amount greater than the cash surrender value but less than the death benefit.

As circumstances change, the ability to obtain cash from the sale of a life insurance policy can be extremely valuable. The majority of Life Settlement transactions are entered into for the purpose of purchasing other insurance or financial products.

Life Settlement proceeds are unrestricted and can be used to fulfill a wide range of financial and estate planning objectives for your client, with the settlement amount determined by policy parameters, age and health of the insured.

Opportunity:

Existing policy where the Insured has one or more of the following situations occur:

• Underperforming policy requiring additional premiums
• Term policy period expiring
• Retirement/sale of business where there is a key executive policy in place
• Divorce or bankruptcy
• Death of spouse or beneficiary
• Estate size growth or reduction
• Tax Reform
• Deterioration of health
• Considering a 1035 exchange
• Corporate restructuring
• Policy Donation desires

Benefits:

• Immediate Capital
• Relief of premium expense
• Maximizes asset recovery
• Alternative to surrendering or lapsing a policy

Considerations:

• Every state has different regulation in regards to licensing and other requirements
• Proceeds from a life settlement can be subject to taxes
• Typical timeline is 4 – 6 months