Senior Settlement

Another type of settlement transaction, often called a “senior settlement,” is the sale of a life insurance policy to a third party, where the insured individual does NOT have a known life-threatening or terminal illness or condition. In these cases the policy owner also receives cash for the policy which is greater than the cash surrender value or lapse value.

There has been a growing market for senior settlements and the purchase and sale of policies that do not meet the traditional definition of a viatical settlement. Typically these transactions involve life insurance policies of a large face amount (often $250,000 or more), or involve “key-person” coverage or corporate owned life insurance or policies representing excess coverage that is no longer needed. These senior settlements are generally not regulated by most states’ viatical laws, therefore the limited licensing and disclosure requirements of viatical transactions would not apply.

Senior Settlement Insurance Types

A senior settlement can be available on the following types of life insurance policies.

- Whole life insurance: You may be able to cash in your whole life policy for its net cash surrender value, which is equal to the savings in your policy plus any dividends and interest, minus any loans, loan interest, and surrender fees. Ask your insurance company what your surrender value is, and compare it to any senior settlement you're offered.
- Term Life insurance
- Universal life insurance
- Individual policies insurance
- Group policies insurance
- Corporate policies insurance
- Policies held in an irrevocable life insurance trust

Some settlement restrictions might apply, call 1-888-973-8377 to speak with a senior settlement counselor.

Senior Settlement Insurance

Senior Settlement Insurance Qualifying Information

Whether you qualify for a senior settlement or not depends on the type of life insurance, the age and health of the insured and the amount of premiums needed every year. Most types of individual life insurance are accepted into a senior settlement. These include term, whole life, universal and survivorship coverage. The amount of life insurance in-force must be above 100 thousand dollars, and the coverage needs to have been in-force for at least 2 years.

When should a senoir settlement be considered?

When you should consider a Senior Settlement

- When life insurance premiums become too expensive to continue
- When re-evaluating your estate planning
- When a key man of an organization retires
- When there is a change in your health condition
- When the policy may be approaching a lapse
- When considering purchasing new insurance coverage, such as Long Term Care coverage

The Secondary Market for Senior Settlement Transactions

The Senior Life Settlement Industry provides a unique financial service to policyholders to use their life insurance policy as a liquid financial asset. A Senior Settlement involves the sale or transference of an existing life insurance policy in exchange for compensation, monetary or otherwise. It is an invaluable service for those in need of financial assistance or a timely alternative for senior individuals re-assessing their estate planning situation.

A Guide for a Successful Senior Settlement

A Senior Settlement will be less than the death benefit, but more than the cash surrender value (Up to 6-8 times). A senior settlement is your best method for converting your life insurance policy into cash today. Each individual senior settlement is different and the payout will depend on a few different circumstances.

More information about senior settlements will be posted..

Life Settlement

A life settlement is a financial transaction in which a senior citizen possessing an unneeded or unwanted life insurance policy sells the policy to a third party, as opposed to surrendering it back to the life insurance company. The seller receives immediate cash for the policy from the purchaser. The entity purchasing their policy becomes the new beneficiary of the policy at maturation and is responsible for all premium payments from the time of the purchase until the seller passes away.

Generally speaking, many policy owners who are the sellers in life settlement transactions are unfamiliar with this option until a financial professional mentions the option to them. This particular type of transaction has not yet become a mainstream financial product like stock and bond transactions, though in the past few years the positive industry growth and attention from high-profile proponents such as Warren Buffett, former U.S. Representative Bill Gradison, and The Wall Street Journal has created much interest in the industry.

A recent overview of the life settlements market can be found in the 2005 Industry Outlook compiled by major industry firm Maple Life Financial. A survey found on page 4 of this publication found that almost half of all responding advisors had senior clients who had surrendered a life insurance policy for the cash surrender value (in the case of a term life policy, the surrender value is $0) when many of these clients could potentially have qualified for a life settlement. Many are beginning to speculate that offering life settlements should fall under the fiduciary duty of a financial advisor.