Life Settlements

Life settlements are quickly becoming a popular option for life owners 65 and older, whose policy has fulfilled its original purpose. Perhaps your children are grown, your retirement is relatively assured, and the need to continue the costly premium payments is no longer justified. Through a life settlement, First One Financial, can assist you with the sale of your life insurance policy and help to reposition your assets.

There are many institutions who will purchase life insurance policies, it our mission to help you better understand how life settlements work and to assist with documentation, underwriting and the bidding process that goes into completing a life settlement transaction.

What is a life settlement???

A life settlement is the sale, assignment, transfer, or bequest of the death benefit or ownership of a life insurance policy by the policy owner. Typically, the owner receives cash in return for a life settlement (generally an amount greater than the policy’s cash surrender value, but less than the full amount of the policy’s death benefit). A life settlement company who purchases the policy then becomes the new owner and beneficiary of the policy and is responsible for all future premium payments. Upon the death of the insured, the death benefit is paid to the life settlement company.

What are the reasons for selling a license insurance policy???

• The life insurance policy is no longer needed or wanted
• The premium payments have become unaffordable
• The owner is considering a surrender of the policy
• The policy is about to lapse
• There is a change in estate planning needs
• There is a change in financial circumstances or assets
• There is a change in family circumstances (such as divorce or death)

How does the life settlement process work?

Although a life settlement shares some common factors with a life insurance transaction, it does involve some substantially different issues. First One Financial representatives have the knowledge necessary to assist policy owners in navigating the life settlement process. We support the policy owners with the proper documentation, underwriting, as well as obtaining the most competitive bids for the policy. Because you will be required to provide personal information in a life settlement transaction, First One Financial, will work to ensure that the companies you deal with have the procedures in place to protect the confidentiality of your personal information.

What is my policy worth?

The amount received in the life settlement transaction depends upon a number of factors;

• The age and medical condition of the insured
• The type of life policy (whole life, universal life, term)
• The amount of death benefit
• The rating of the issuing life company
• The amount of premium needed to keep the policy in force
• The compensation the life settlement broker receives

What are the alternatives to entering into a life settlement?

• Borrow against the cash value of the life insurance policy
• Cash out the policy based on the available cash surrender value
• Check with the life insurance company to find out if the policy can be converted to a paid-up policy or if the death benefit can be reduced to lower the premium payments
• Use the life insurance policy as collateral to secure a loan

What else should I know in considering a life settlement?

Typically, there are no requirements for disclosure, but a policy owner should consider the following before proceeding;

• The potential tax implications of a life settlement
• The benefits of keeping the original policy
• The receipt of life settlement proceeds may affect eligibility for public assistance programs
• The insured may be contacted periodically by the life settlement company for information about the insured’s current health status
• Agents involved in these transactions may not be required to be licensed or trained

What are the benefits of a life settlement?

• Provide funds for new, cost effective life insurance
• Provide cash for gifts to family members
• Provide funds for charitable giving or to establish a charitable remainder trust
• Remove a policy from an estate due to reduction in estate size or projected tax liability
• Receive considerably more money than the cash surrender value of the policy