"The professional or fiduciary obligations of financial advisors now include the need to treat life insurance policies as a fully evolved property on a par with the client's other financial assets."
Many types of life insurance policies have the potential to become life settlements. The ideal candidate for a settlement is a male, age 70 or older, whose insurance policy has no outstanding loans. When it comes to the qualification process, health is the determining factor. Whether seniors are 65 or 85, they must have experienced a substantial decline in health since purchasing their policy, but not to the extent of terminal illness. Healthy seniors under the age of 65 do not qualify.
The ideal policy for a settlement is a universal life policy issued more than two years ago, but not so long ago that the cash value represents a large percentage of the face value. The issuing company must be A rated or better. The premium-to-face ratio should be low, and the policy face must be at least $250,000. As the policyholder considers their overall financial plan, the policy must no longer be needed or wanted.
The life settlement process begins with a thorough evaluation of the client's need for coverage and the suitability of the sale with regard to their entire financial profile. If it's in the client's best interests to sell the policy, the market value of that policy will be ascertained. In order to establish the market value of the policy, we'll need a completed settlement application, authorization forms that allow us to obtain medical records, and current in-force policy illustrations.
By accessing our institutional funding sources, we'll try to get multiple offers for the sale of the policy. Once an offer is deemed acceptable, appropriate documents are drawn for signatures by all parties, including seller's mental ability to understand and enter into the transaction. When the documents have been executed and returned to the company, the change of ownership and beneficiary designation will be sent to the company and the funds will be released to the policy owner/seller.
The Financial Asset
An insurance policy is a financial asset. It may be a term policy bought for the specific purpose of providing income for a family in the event of a death of a family member. It may also include provisions for the accumulation of VALUE as in the case of whole life or universal life insurance. Whether it is term, whole life, or universal life insurance, the policy may have VALUE that is beyond the obvious. Insurance Valuation Services, Inc. may be able to help you to obtain greater VALUE in the form of cash for the sale of the policy than is provided within the policy itself. Before you advise your clients to lapse or surrender their unwanted or unneeded life insurance policy let us assess and ascertain it's true VALUE. You and your client may be surprised!
Before your client lapses or surrenders their unwanted or unneeded life insurance policy...let us help you determine its true value. You both may be surprised!
Our goal is to help you determine the true value of an existing life insurance policy. We know how to think outside that traditional insurance box. The cash value in your client's existing policy may be just a fraction of that policy's real value. Even term insurance policies may have hidden value. Our professionals can help determine that true value by accessing the secondary market for life insurance policies.
Valuation vs. Viatical
"Policy holders who got the information about the life settlement market received nearly four times as much value for their policies as they would have received had they been deprived of this information."
Viatical Settlements in the 1990s
The life settlement market grew out of the viatical settlement market that developed in the early 1990s to provide cash to needy AIDS patients. The viatical business received some well-earned bad press, so it's important to distinguish the modern life settlement business from its viatical ancestors. The early viatical businesses too often matched desperate AIDS patients with unsophisticated individual investors. Much has changed today - most importantly, the funding sources.
Life Settlements of Today
Life settlement investors are largely institutional funders - insurance companies or banks - all performing extensive due diligence. Today's life settlement companies look at the investment much like insurance companies regard their annuity business: as just another actuarial job. The policies are held in trust and the anonymity of the insured is assured.