About Life Settlements for Senior Citizens: $250,000
Could be Sitting in Your Desk Drawer
Editor's Note: An investigation of the booming life
settlement industry for the Senate Special Committee on Aging recently
found unintended consequences for consumers, sales and marketing abuses,
and insurance fraud, all exacerbated by the high commissions earned by
life settlement brokers. A hearing of the committee (see sidebar link)
also exposed risk in their being bundled as investments. Here John Yaker,
president of Quantum Life Settlements, presents for readers of
SeniorJournal.com the positive side of these transactions.
By John Yaker
May 18, 2009 - Are you about to throw $250,000 or
more away? If you have a life insurance policy youre about to surrender
back to your provider or, worse, allow to lapse, you may very well be
losing a significant amount of money.
Historically, taking a cash surrender from your
life insurance provider or allowing your policy to lapse have been the
only two options life insurance policyholders have had when faced with a
policy they no longer wanted or needed. Unfortunately, 90 percent of
policyholders do exactly this throw away their money without thinking
about it.
Fortunately, retirees now have the option of
arranging a life settlement an option that could net them hundreds of
thousands of dollars and provide a much-needed cash infusion in these
troubled economic times.
A life settlement is, simply, the sale of an
unneeded or unwanted life insurance policy to a third party usually a
financial institution for a lump sum cash settlement. That third party
then becomes the policy owner and beneficiary, also assuming
responsibility for paying future premiums.
On average, a life settlement can provide three to
five times more than the policys cash surrender value, sometimes more.
If you have, for example, a $1 million policy and your insurance
provider has offered $85,000 as a cash settlement, pursuing a life
settlement may bring you as much as $325,000 for the same policy. Even
term policies, which many people make the mistake of assuming have no
cash value, can be converted and used for a life settlement.
In todays economy, life settlements can provide
immediate relief for retirees whose stock portfolios have dwindled and
who are facing the reality of not having the money they expected to live
on in their retirement years.
Additional reasons for pursuing life
settlements include:
● Term policy(s) about to expire
● The estate has been significantly reduced,
eliminating the need for coverage
● A key-man policy(s) or other business-owned
insurance is no longer needed (business sold, executive retired, etc.)
● Change in health status of the insured
● Underperforming policy(s)
● Retirement
Most life settlement companies seek policies with a
death benefit of at least $500,000 and that has been in force for at
least two years. In addition, the policyholder should be at least 70
years old, with a life expectancy between two and 15 years.
The life settlement process is as easy as it is
lucrative. Generally speaking, the process takes only 90 days from
beginning to end. Once youve decided to pursue a life settlement, your
life settlement broker will collect and review your insurance and
medical information and complete the following steps:
1.
Send the case to the banks and hedge funds who buy the policies.
(Investors)
2.
Negotiate the highest possible settlement offer. This offer is
non-binding.
3. If
the offer is accepted, contracts and closing documents are sent to the
broker for completion.
4.
Transfer policy ownership to the investor, place funds in escrow.
5.
Release funds from escrow to the seller.
At each step during the process, reputable life
settlement companies keep brokers and clients informed regarding the
process on a weekly basis and offer complete transparency at each step.
Clearly, life settlements can be a tremendous
financial relief in troubled times. If youre faced with an unwanted or
unneeded life insurance policy or can no longer afford expensive
premiums, dont throw your money away. A life settlement can provide the
peace of mind you deserve in your retirement years.
John Yaker is president of Quantum Life
Settlements, a Baltimore-based life settlement company. He can be
reached at
john@quantumlifesettlements.com or 410-327-9550.
Keep up with the latest news for senior citizens, baby
boomers
May 18, 2009 - Are you about to throw $250,000 or
more away? If you have a life insurance policy youre about to surrender
back to your provider or, worse, allow to lapse, you may very well be
losing a significant amount of money.