Life Settlement Investments
Choosing life settlement investments as a means of obtaining needed funds may, in some situations, be a wise alternative to debt or financial ruin. When a policyholder is facing a serious or terminal illness there can be an urgent need for funds. This could be due to the fact that the individual is very sick and is not able to earn a living. It could also be due to mounting medical expenses and the need for expensive, but health sustaining treatments. In these situations, many households find that a little creative thinking is called for. There are organizations that will purchase life insurance policies from individuals with serious or life threatening health issues. Of course, these policies will be purchased for less than their pay out value. The purchasing organization will then collect on the policy after the original seller has passed away. The thought behind such investments deals with an expectation of the imminent demise of the original policyholder. While this may seem to be a somewhat morbid way to turn a profit, life settlement investments can actually serve a very useful purpose for both the seller and the buyer. And each party is taking a bit of a chance on what the future will hold. If the seller should recover, they will have obtained cash to pay for pricey medical care and perhaps have also avoided bankruptcy. Additionally, they will have used the money earned through the insurance policy sale to gain access to the very medical treatments that restored their health.
For the buyer, life settlement investments can also be a good deal. In the unfortunate event of a seller's death, the buyer can collect, sometimes in a very big way, on an insurgence policy that they have invested only a moderate amount of money into. Anyone who is dealing with a terminal illness will have a multitude of difficult issues to handle. Financial pressures can only add to the stress. The knowledge that a hefty insurance settlement will be available upon the death of the individual can be frustrating. Buying agencies offer to purchase these policies at a discount. The buyer will continue to make payments on the policy for as long as the original policyholder is alive. Should the original policyholder recover, they are under no financial obligation to the buyer. Buying organizations that choose to make life settlement investments understand that this is all part of the deal. The funds that have been made available to the seller can sometimes end up leading to a cure, or can prolong the seller's lifespan beyond original predictions. Investors are not being taken advantage of here. They will usually require that policyholders supply a detailed medical history before a final decision is made. As with any investment, there is a certain amount of risk that is to be expected. Buying agencies will usually take into account the amount of time that the seller is expected to live and weigh this factor into any policy purchasing decisions.
These life settlement investments are sometimes called viatical settlements. A policyholder may choose to sell of only a portion of the policy that they are holding rather than the entire policy. If a seller has a somewhat longer life expectancy, the policy or partial policy may end up going for a much lower price. From the buyer's point of view, such an investment may be considered very high risk. Each state will also have specific rules that govern how such transactions are permitted to take place. There are many pros and cons that are associated with this type of investing, While on the surface, this can seem to be a beneficial situation for all concerned, this may not always be the case. Any policyholder who wishes to leave a legacy behind for their children may wish to reconsider. The life insurance policy pay off will end up going to investors rather than offspring. And usually, the amount of money that is raised in life settlement investments for the seller will usually end up representing a mere pittance when compared to the eventual pay off. In general, these transactions are best suited for policyholders who do not have large estates and tax issues to be worried about, or who do not have any beneficiaries. Sellers should also take care to make sure that the organization that they are working with is a reputable one. There are many buyers who do not utilize ethical practices in these transactions.
Choosing to take advantage life settlement investments can be a much better choice than allowing a valuable policy to lapse all together. As a policyholder gets older, the value of life insurance will tend to increase. A financial adviser who is truly looking out for the welfare of the client will of course want to present all details of entering into such an investment agreement. The Bible tells believers that hope and strength can be found in God. "The Lord also shall roar out of Zion, and utter his voice from Jerusalem; and the heavens and the earth shall shake: but the Lord will be the hope of his people, and the strength of the children of Israel." (Joel 3:16)
Before moving forward with life settlement investments it is a good idea to consult a financial professional. The help of an attorney may be needed as well. These investments can be complicated. Additionally, each transaction agreement can differ greatly. It is important that a policyholder understands the details of the arrangement before signing any agreement.
Life Settlement SolutionsIn some cases, life settlement solutions can be a good idea for policyholders who need quick financial answers. The way that such transactions work is relatively straight forward. A policyholder will sell a life insurance policy to an investment group or other agency in exchange for a lump sum payment. The policyholder will also be relieved of the responsibility of paying premiums on the policy. Generally, the lump sum that is paid to the seller will be significantly less than the face value of the policy. When the original policyholder passes away, the investors will be entitled to receive the full pay out on the policy. Frequently, those who are interested in such transactions are senior citizens who need additional funds to handle the pressing financial issues that can be associated with retirement years. If an individual has more than enough coverage of this nature, and if heirs are relatively well taken care of, this approach can be a good idea. This is particularly true if the seller has taken pains to make sure that all final expenses have been met in advance and that a seller's survivors will not be saddled with a large amount of debt upon the seller's death. When all of these details have been attended to, life settlement solutions can constitute a wise financial move. Some investors prefer viatical settlements and will only purchase policies from insured individuals who terminally ill. The thinking behind such transactions is that the seller will have access to needed cash during the last days of their life and buyers will have relatively quick turn around on their investments as well.
There can be a wide variety of approaches to life settlement solutions. Some organizations will participate in a great deal of marketing activity and attempt to draw in potential sellers through aggressive methods. Other organizations will choose a much more low key approach. Rather than offering advertising that is geared toward the general public, these purchasing agencies will work on a referral basis. An individual's insurance agent, accountant, estate planner or attorney might make a recommendation to a client and refer them to a specific agency or investment group. This approach can tend to offer assurances of more fair treatment and equitable terms for the seller. Once the decision to pursue life settlement solutions has been made, the origination process will begin. An eligibility screening will often be the first step in the origination process. If a case has been qualified as eligible, medical experts will evaluate the case and arrive at a life expectancy rating. The insurance carrier will also be contacted to make sure that the policy is still a valid one and has not been allowed to lapse. There are a variety of industry professionals who might be involved in these proceedings. Brokers might represent policyholders during the transaction. Insurance agents might make recommendations to both clients and investors. Accountants, attorneys, and financial planners may also work to represent the needs of a particular client.
There can be a variety of eligibility requirements that are associated with life settlement solutions. The policy must be a valid one with payments that are completely up to date. The face value of the policy will generally be required to fall within in a certain dollar amount. Multimillion dollar policies will often not meet a purchasing organization's eligibility requirements. After a medical evaluation, the policyholder's life expectancy will generally fall within a certain time frame, usually somewhere between two and twelve years. Life expectancy is usually determined by independent evaluations of experts in mortality profiles. A mortality profile will be used in assigning a monetary value to the transaction. Generally, the shorter the life expectancy of the individual, the larger the pay out to the seller. This is because the purchaser will receive a return on their investment sooner and will make fewer payments into the policy before the final pay out. Since so much of the information that is shared here is of a very private nature, confidentiality concerns are paramount. Policyholders do not want private information such as medical records and life expectancy to be shared openly or made easily available to other parties. Making sure that the seller's personal data is kept private must be a major priority in life settlement solutions.
Concern over the issue of fraud is a major consideration with providers of life settlement solutions. Some providers will not consider underwriting any policy if the policyholder has a life expectancy of two years or less. The reasoning behind such decisions is that the insured individual would be better off keeping the policy so that beneficiaries can inherit the money. Selling a policy is usually not a good business deal for individuals facing imminent demise. The Bible explains the kind of hope and strength that God offers to believers. "The Lord also shall roar out of Zion, and utter his voice from Jerusalem; and the heavens and the earth shall shake: but the Lord will be the hope of his people, and the strength of the children of Israel." (Joel 3:16)
The closing processes for life settlement solutions do not need to be complicated. In some cases, beneficiaries will be required to sign a release before a transaction can close. Competency of the insured individual will often need to be proven as well. Forms that detail the change in ownership and beneficiary will also need to be completed. When all of these details are handled in an ethical manner, the transaction can be completed and the seller will receive payment.