Life Settlement Questions
Is a Life Settlement legal?
In 1911, the Supreme Court recognized that life insurance policies are fundamentally an asset with value and ruled that it was therefore legal to transfer ownership. As is characteristic of most types of property, you can sell it, trade it, or gift it. Generally, your insurance company has no legal right to block or question your assignment of policy rights.
Who should consider a Life Settlement?
Is it a smart financial option for me?
We will happily discuss your circumstances and financial goals with you to help determine if a Life Settlement is a smart financial option for you. But in general, people who are good candidates for a Life Settlement are age 65 or older and have re-evaluated their need for a life insurance policy. If they conclude that they no longer need the policy to protect their children or assets or can no longer afford the high premiums, they may consider determining the cash value by opting for a Life Settlement. In this way, they can benefit from the liquidity that the Settlement will provide while they are living.
Could I still qualify for a Life Settlement if I have a terminal or catastrophic illness?
Life Settlements for patients with terminal or advance-stage illness are also known as Viatical Settlements. Generally, most people who are coping with such illnesses are well-qualified for this type of Settlement. The ALIR team has been very successful in obtaining outstanding results for these individuals. You can learn more about Viatical Settlements here.
What if I want a Life Settlement, but I still want or need life insurance?
This is a decision that is entirely up to you. Even after selling a policy through a Life Settlement, some people still feel more comfortable having some type of coverage, and it is certainly not out of the question. Your agent or financial adviser would be able to guide you in this matter, or you can Contact Us and we’d be happy to discuss your options with you.
Selling Your Policy
What types of policies can be sold in a Settlement?
There are several types of policies that can be sold in a Settlement. They include:
- Universal Life
- Whole Life
- Variable Universal Life
- Term and Convertible Term Life policies issued by insurance companies based in the United States
- Joint policies
- Second-To-Die policies
Please Contact Us if you have any questions about policies that qualify for Settlement.
Can I sell my life insurance policy on my own?
In most financial and estate plans this would not be recommended. Life Settlements are very complex legal and financial transactions. This is further complicated by continuously changing compliance regulations, which requires diligence to ensure that best practices are being implemented at all times. Simply navigating this market requires professional assistance, in addition to maximizing the policy’s value in the marketplace and locating an viable buyer in a timely fashion.
ALIR values each relationship it cultivates with policy holders. We have a responsibility to represent every individuals best interest and value our reputation in the Life Settlement industry. Your trust in ALIR is not misplaced.
Should I work with more than one funding source?
One of our goals during the Settlement process is maximizing your policy’s value in the marketplace. Since buyers tend to avoid policies that they have received from multiple brokers or providers, working with more than one funding source could inadvertently result in lesser valuations or unnecessary delays in funding.
What is my policy worth?
Since policy amounts and payouts widely differ, it is impossible to set a standard amount. Experience indicates that historically policy holders can generally expect to get a significant percentage of their policy value—well in excess of the surrender value.
ALIR’s Life Settlement Calculator is a prudent place to start if you need a quick estimate of what your policies cash value.
How much should the policy’s face value be?
Typically, a policy with a face value of $50,000 or higher could be eligible to convert into a Life Settlement.
Who is going to buy my policy?
We have built strong relationships with a broad network of investors experienced in the life settlement industry. Our investor network is interested in buying a variety of assets to balance their investment portfolios. These are the companies and individuals that we work with to sell your life insurance policy.
How long will it take for me to receive the funds from my policy?
Your Settlement amount will be released from escrow within 72 hours of the buyer’s receipt of the confirmation of change of ownership and beneficiary rights from the insurance company.
What are the fees associated with a Life Settlement transaction?
It is important to us for you to feel comfortable entrusting us with your asset. Therefore, we do not charge any up-front fees. As far payment and compensation details, ALIR will provide you with full and complete disclosure of fees for our service very early in the process.
Wouldn’t it be easier to return my policy for the surrender amount?
Historically surrendering the policy yields less value to policy holders. Often the surrender value turns out to be a fraction the value realized via a Life Settlement. In addition, ALIR facilitates the bulk of the paperwork and underwriting burden during the settlement process. Policy holders can choose to be involved in the process as little or as much as they desire.
Will I still be obligated to pay premiums anymore after my policy is sold?
No. Once the policy is sold, individuals are no longer responsible for paying any future premiums. Our Life Settlement Calculator will give you an approximation of how much you can expect to save in the future once you are no longer obligated to pay those premiums on your policy. The amount may surprise you!
Will I owe taxes on the money I receive?
Typically, the money that you receive in a Life Settlement will be tax-free up to the original policy’s tax basis. This can be highly beneficial to policy holders. However, we are not tax experts. For the best possible outcome, we strongly urge you to contact your own tax professional or CPA for specific advice concerning your situation.
Are there restrictions on how I can use the funds I receive from my Settlement?
No. This is where Life Settlements stand out from many of the other common financial options for seniors. You will be completely free to decide how you want to use the proceeds from your Life Settlement.
Peace of Mind
How am I protected?
Your protection is of paramount importance to us. Our goal is for you to have complete peace of mind from start to finish, and we’ve structured our entire process towards that goal. The bulk of this has been accomplished by developing procedures that eliminate a great deal of the risk associated with most large financial transactions. As a result, there are no out of pocket costs when you work with ALIR. And even after you have started the process, you are not obligated to sell your policy or to accept any offer. A third party escrow company is also used in every transaction. Finally, we only work with legitimate, reputable licensed companies in the industry.
Will my privacy be protected?
What if I change my mind after I receive my Settlement?
In most states you will have 15 days (up to 30 days in some states) after the receipt of your funds from the buyer to change your mind.
Did we answer your questions?
If you still have questions please feel free to contact us.