Q&A
Table of Contents
What types of policies are purchased?
How much will I receive for my policy?
Is there any obligation?
Do I have to sell all of my policy?
How long does it normally take to sell a policy?
What happens to the policy after I sell it?
Are the proceeds taxable?
What if I change my mind?
What if I die shortly after selling my policy?
What if I still need coverage?
Is there any fee for securing offers for my policy?
What types of policies are purchased?
- Universal Life
- Variable Universal Life
- Whole Life
- Key Man
- Split-dollar
- Buy-Sell
- Corporate/Company Owned Life Insurance (COLI)
- Bank Owned Life Insurance (BOLI)
- Term
owned by ...
- An individual
- Trust
- Corporation
- Charitable organization
How much will I receive for my policy?
These factors determine the amount you could receive:- Age
- Premiums
- Client's health and life expectancy
- Type of policy
- Prevailing interest rates
- Insurance company rating
- Policy size
- Loans against the policy
- Cash value of the policy
- Competitive bidding
- Premium payments required to keep the policy in force
Is there any obligation?
No. There is never any obligation to accept a Life Settlement offer. Back to the Top
Do I have to sell all of my policy?
No. You can sell only a part of your policy and assign or transfer the part being sold. You will continue to own the unsold portion of the policy. Back to the Top
How long does it normally take to sell a policy?
Under normal circumstances most people receive their settlement proceeds within 60-90 days after they submit an application. Back to the Top
What happens to the policy after I sell it?
All rights and obligations of the policy are transferred to the new owner. They will be responsible for making premium payments on the policy. If you had any loans on the policy they will be responsible for repayment instead of you. The new owner will name a new beneficiary of the policy who will collect the proceeds upon the insured's passing. Back to the Top
Are the proceeds taxable?
This question should only be answered by your professional tax advisor.In general, the proceeds are:
- Tax free up to the amount invested(Premium Payments)
- As ordinary income up to cash surrender value
- And as capital gains above cash surrender value
What if I change my mind?
If you change your mind about selling your policy, you can cancel the life settlement contract at any time up to the end of the period stipulated in the Life Settlement Purchase & Sale Agreement. This period is usually between 15 and 30 days but may vary on a state by state basis. If you change your mind, the provider is required to have the insurance company transfer the ownership of the policy back to you. If you have already received payment you are required to return it to the provider. Back to the Top
What if I die shortly after selling my policy?
If you die at any time up to the 15th day (30 days in some states) after you receive the money from the provider, the settlement contract will automatically cancel. The provider will pay the owner of your policy or beneficiaries designated by the owner in the life settlement contract any proceeds it receives from your policy, minus any money it already paid for the purchase of your policy and any premiums it paid to the insurance company to keep your policy current. The insurance company or the provider should refund any unearned premiums paid. Back to the Top
What if I still need coverage?
Frequently sellers secure less expensive coverage before selling an existing policy. If you have an older, high premium or under performing policy we can help you obtain bids for new coverage while we are getting offers to purchase your existing policy. Since people are living longer, insurance companies have lowered rates significantly during the past few years, especially at older ages. Therefore, it is sometimes possible to buy new insurance at less cost than just a few years ago. Click here to go to the Examples page to see how we've helped others reduced their life insurance cost. Back to the Top
