There’s almost no financial asset that can’t be sold at some point in the process. That includes a life insurance policy, and that’s what a life settlement is all about. There are certain advantages and disadvantages to a life settlement, and you need to know all the details of both before considering a sale. What is a Life Settlement? A life settlement takes place when you sell your current life insurance policy to another party. It enables you to sell it for an immediate cash benefit. However, it’s quite a bit more complicated than the sale of other assets, particularly any type of financial asset. A life settlement can be structured in different ways and you’ll need to carefully weigh if...
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You may “assign” your Federal Employees Group Life Insurance to one or more persons, firms or trusts. Assignment means that you agree to give up ownership of your Basic, Standard Optional (“Option A”) and Additional Optional (“Option B”) life insurance coverage forever (note: Family “Option C” coverage cannot be assigned since you are the beneficiary, not the insured person). When you assign coverage, the assignee becomes the beneficiary but you must continue to pay the premiums. There are three main reasons you might want to consider assigning your FEGLI insurance: To comply with a court order—You may make an assignment of your group life insurance in order to comply with a court order for...
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Money you receive as part of an insurance claim or settlement is typically not taxed. The IRS only levies taxes on income, which is money or payment received that results in you having more wealth than you did before. Because the purpose of insurance is to "make you whole", you should generally only receive enough payment to bring you back to the state you were in before an incident occurred. You might receive a substantial payout from an insurer to fix your car, but if the money is only used to make you whole, it wouldn't be taxable. Read on to learn about the exceptions you should be aware of. Claims to Repair or Replace Your Home, Car or Other Property Aren't Taxed One of the most common...
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Over the past few years life settlements have become a more attractive investment opportunity and there is an increase in the amount of hedge funds which are being formed to invest in various life settlement strategies. This article will discuss life settlements and will introduce some of the issues which hedge fund managers should discuss with their attorney if they want to start a life settlement hedge fund. From Viaticals to Life Settlements and Premium Finance Life Settlements are the younger sibling to the Viatical industry which was popular in the 1980’s with regard to AIDS patients (see SEC description of Viatical’s below). A “life settlement” usually refers to a secondary market...
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Depending on where your news is coming from, life settlements are either the best thing since bread was first sliced or an investment option to be avoided. As with most things in life, the truth settles somewhere in the middle. Life settlements are a relatively new investment opportunity for individuals, which may explain why there is so much misinformation, contradictory information and flat-out fake news floating around the internet on the topic. Here, for your reading pleasure and to help determine whether life settlement investments should be included in your portfolio, is a look at the facts: Claim: Life settlement investments are unfair to seniors This claim was made in a publication...
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Purchasers of long term care insurance from MetLife who experienced a hike in premium rates may soon receive relief pursuant to a settlement agreement reached in the case Newman v. Metropolitan Life Ins. Co., No. 1:16-cv-03530 (N.D. Ill). The settlement follows a rare victory in the Seventh Circuit Court of Appeals for aggrieved long term care policyholders subjected to unforeseen rate hikes. See Newman v. Metro. Life Ins. Co., 885 F.3d 992, 996 (7th Cir. 2018). Unlike life insurance, long term care insurance policies have adjustable rates; and courts will often uphold the right of insurers to increase premiums in any amount, for any reason, provided the contract of insurance contains the...
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How do you sell a life insurance policy? Work with a licensed life settlement broker to appraise, prepare, and present your policy to large number of investors to find the highest bidder. If you decide to select a bid, the deal goes into escrow, and ultimately closes with the 3rd party investor taking ownership of your policy in exchange for a cash settlement that is valued higher than the cash value in the policy and lower than the death benefit. What is a life settlement? A life settlement is the term used for when a life insurance policy owner transfers ownership to a 3rd party investor in exchange for a cash settlement. Eligible policies include Universal Life, Whole Life, and...
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Following the death of the policy holder, the way in which proceeds from a life insurance policy are paid to the beneficiary (or beneficiaries) is known as the settlement option. And you might be surprised to learn that there are a variety of settlement options available besides the most common method—a lump-sum payout. Depending on the life insurance company and policy, these options may be selected by the policy holder ahead of time or chosen by the beneficiary upon the insured’s death. Whether you’re the policy holder or beneficiary, it’s important that you understand these options in order to maximize the policy’s financial benefit and reduce potential taxes. Here are six popular life-...
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Manulife Financial Corp. has become embroiled in a high-stakes battle in the United States that pits insurers against investors who are buying up individual life insurance policies. Traditionally, when an individual decides that he no longer wants a life insurance policy or can't afford the premiums any more, he either lets the policy "lapse," in which case the insurer pockets the premiums, or turns it in for its cash surrender value, which costs the insurer less than the death benefits would have. Insurers routinely make assumptions about the amount they will save from those policies. But in the U.S., a business known as the "life settlements" industry has sprung up to try to capture some...
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Future of Life Settlement Industry “Never Looked Brighter,” Says Expert At LISA’s 2016 Spring Life Settlement Conference CHICAGO, May 17, 2016 (GLOBE NEWSWIRE) -- The U.S. life settlement industry is well positioned for sustained long-term growth, according to speakers at the Life Insurance Settlement Association’s (LISA) 22 Annual Spring Life Settlement Conference, held over the past two days at the Hilton Palmer House in Chicago. “The future of the U.S. life settlement market has never looked brighter, fueled by demographics trends that offer enormous potential to drive growth,” said Colin Devine, Principal of C. Devine & Associates and a veteran life insurance industry analyst. “With...
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