Senior Life Insurance Settlement
A senior life insurance settlement may the answer for an older person who is facing a financial crisis and needs to cash out his death benefits policy. With the inability to continue paying the premiums, the crisis facing the older person may force the senior to allow his dealth benefits policy to lapse. There may have been a change in a person's tax situation, so the temptation to allow the policy, meant to cover estate taxes to lapse may be great. No matter what the changing life circumstance might be, the need to have a senior life insurance settlement may one day be an option someone needs to consider. In fact, just allowing a policy to lapse may be an extremely costly decision to make, and one that could be avoided with the proper knowledge.
One of the most well-known examples of a senior life insurance settlement would be the viatical, a settlement that provides terminally ill seniors with the option of receiving money for their death benefits policy. Almost any life-ending disease that brings someone to the door of eternity will qualify a senior for getting money from their death benefits policy. This may be a tremendous answer for those who are looking for relief from overwhelming medical bills or who long for the ability to do something for surviving relatives before they die. There are specific instances in which viatical agreements may be subject to capital gains taxes. For example, if the cash surrender value is less than premiums paid, or if the surrender value is greater than premiums paid, the difference between the settlement and premiums paid are capital gains and subject to IRS regulations. A person considering a viatical senior life insurance settlement should definitely talk to a financial planner or tax expert to understand fully the tariff implications.
For an older adult, the choice of getting an indemnity settlement may be vastly superior to a reverse mortgage that has a number of downsides to it. The famous TV stars announce on commercials that a senior can begin making his house work for him, by providing a monthly income while still being able to live in the house until death. And this is all true, but there are many fees and upfront expenses, and one will never receive the true value amount that the home is actually worth. In some cases these mortgage can upset one's Medicaid eligibility and there will be little or nothing to leave to survivors once the owner has exhausted all mortgage funds, so it is in effect, the selling of one's house to another, but still getting to live there until death. "Whereas ye know not what shall be on the morrow. For what is your life? It is even a vapour that appeareth for a little time and vanisheth away." (James 4:14)
In terms of a pre-death benefits settlement that affects a senior adult, there are a number of factors that go into how much he or she will receive of the policy's face value. The original face value of the policy, life expectancy, cost of premiums, projected interest rates and the health of the company that sponsors the policy all go into the final amount that a person will receive in a senior life insurance settlement. But it needs to be said that a buyer of death benefits settlement will not give the full face value of the policy; in fact, it may only be half of the amount, because of the risks the buyer will be taking. One of the biggest risks is if the insured person lives quite a bit longer than expected. When the buyer of a senior life insurance settlement must wait three or five or ten years longer than the projected time of death of the insured person, it means money that could have gone to building more company capital, more investments, etc. must be put on hold.
Most types of death benefits indemnity policies qualify for a senior life insurance settlement agreement, including policies that do not develop cash value, such a term insurance. Groups policies, universal policies, whole policies, corporate owned insurance and many others all qualify. For corporations that have held a key person policy in places for many years, they can sell a policy when the person retires and is no longer working for the company. Nonprofit organizations are often made the beneficiary of death benefits policies and can sell them for much needed capital. And for the retired couple just struggling to make each month's premium payment, it is a wonderful relief to have that premium just go away.
Many companies that buy older individuals' policies look for outside investors to fund these purchases of senior life insurance settlement agreements. When the traditional sources of investing aren't performing well, the large return that can be made on the insurance settlements can be very attractive to those looking to grow their money. While the risks can be high, the return is also and this fits some investors quite comfortably. The Boomer generation is now racing into retirement and the trend will continue for the next thirty years as a large portion of the population will be in retirement mode. This spells a booming market for the purchasers of life policies belonging to older persons. Choose wisely when securing a buyer for that life insurance policy by checking references and bringing an attorney into the picture to make sure everything is legal and fair.
Senior Life SettlementA senior life settlement might be pursued for a variety of reasons including financial need or a desire to retire. In any case, the decision to sell off assets such as insurance policies can answer important financial questions for many policyholders. In some instances, policyholders may have come to the point in their lives when they no longer need to carry a large insurance policy of this nature. Concern over a beneficiary may inhibit some individuals from seeking these settlements, but many policyholders find that this is not a concern. This is particularly true if a planned beneficiary passes away first. For retired individuals, the cost of premiums on the policy may have become too heavy a burden to bear. A senior life settlement can carry a number of benefits to the seller. When an investor purchases a life insurance policy, they will usually pay the policyholder a lump sum of cash that is lower than the amount of eventual pay out that the policy offers. This investor will then continue to cover the premiums on the policy and will be named as beneficiary. The original policyholder may have any number of needs that a settlement of this nature can be applied to. Some sellers may feel that they are at a point when other types of coverage are a higher priority. Long term care insurance can be costly, but may end up saving a great deal of money in the future for the individual. Money from these settlements can be used to offset the cost of long term care insurance. Funding retirement expenses might be another reason for choosing this option.
Some policyholders choose senior life settlement options as a way to handle the expenses of long term care or assisted living costs. When an individual is having difficulty meeting costly insurance premiums, it can be much wiser to pursue settlements of this nature than to simply let a valuable policy lapse. In many cases, a policyholder simply needs to attain access to a viable retirement income and will sell off a life insurance policy for this reason. Additionally, if a policyholder finds themselves suddenly dealing with a serious illness, this can necessitate the sale of a coverage that is not longer needed. Qualifying for a senior life settlement can involve a number of important criteria. The type of insurance policy that is being offered for sale will have a bearing on the success of the transaction. Other pertinent questions will be asked as well. What is the current health of the policyholder? What kind of future health prognosis can the individual claim? While most types of life insurance may be eligible including term, whole life or other types of coverage, the dollar amount that is attached to the policy will be taken into consideration. Many investors will not consider policies that are under one hundred thousand dollars in value. The policy must also be up to date and have been in effect for at least two years. Other considerations could include the size of the premium and the age of the policyholder.
There area a number of things that a policyholder should consider before agreeing to a senior life settlement. Will the seller's estate be impacted in a way that is not satisfactory to the policyholder should they decide to sell? Will the sale of the policy greatly improve the standard of living for the seller? Are there other types of investments that a policyholder might wish to use the lump sum payment for? Is the policy no longer needed? Is the policyholder having a hard time meeting regular expenses? Would the sale of this asset mean that the policyholder will be able to retire? There are a number of organizations that are willing to purchase a senior life settlement. Consumers should do careful research as well as a good deal of comparison shopping when considering this option. Since the terms as well as the customer service that is offered by these organizations can vary widely, it can be a good idea to consult with an insurance or financial professional before making a final decision. Settlements of this nature are sometimes confused with viatical settlements. Viatical settlements involve policyholders who are facing a terminal illness. This is not necessarily the case with standard life settlements.
A variety of policies can qualify for a senior life settlement. Both whole and universal life policies will generally be eligible. Term, survivorship, adjustable, and first or second to die policies may be eligible as well. Of course, there are other qualifying factors including the age of the policyholder and the length of time that the policy has been in effect. The Bible provides assurances to believers regarding the guidance and protection that God offers. "The Lord is my light and my salvation; whom shall I fear? the Lord is the strength of my life; of whom shall I be afraid?" (Psalm 27:1)
A senior life settlement could also be a vital part of a well planned estate. A professional estate adviser can help families consider all options, including settlements of this nature. In some cases, there may be tax benefits associated with pursuing the option of selling a life insurance policy. The cash that is obtained through these settlements can also be used to meet certain needs such as paying gift taxes. Whatever choices a policyholder might make, professional advice can be very valuable.