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SENIOR SETTLEMENTS, A NEW
OPTION FOR SENIORS
What is a Senior Settlement?
A "Senior Settlement" is the sale of a life insurance
policy for an immediate lump sum of cash that is greater
than the cash value or surrender value of the life insurance
policy.
Who Is A Candidate for Senior Settlements?
Life insurance is purchased for many reasons. The
recurring factor is the need for personal or business
protection. Now, what happens if your needs change and the
reason you purchased the policy has disappeared? Here are
some examples of changing circumstances that could trigger
the opportunity for a Senior Settlement transaction:
• Change in estate size
• Change in health condition
• Divorce/Bankruptcy/Retirement
• The need to exchange high annual premiums for
monthly income
• Premiums no longer affordable
• Selling a Business
• Surrendering a policy or one in danger of
lapsing
• Need funds for alternative investments
• A family trust has eliminated the need for life
coverage
Life insurance is valuable financial planning tool for many,
but if the need for life coverage no longer exists, why
would anyone keep paying for the policy?
Placement Parameters
Generally, when the insured is 65 years or older they
may qualify for a "Senior Settlement," or a lump sum payout.
This allows the insured and his or her beneficiary to get
immediate cash rather than wait for death of the insured.
The size of the cash payout depends on the age and the
health of the insured, plus that the type of policy, its
premium structure and it's cash surrender value.
What Is Required For A Policy Appraisal?
The process is simple. In most cases an application and
a release form are all that are required. There are no
physical exams, tests or application fees. If the policy is
deemed to be suitable for a Senior Settlement placement,
some other information will be required. We will need to get
a copy of the policy and have the insured agree to allow the
Senior Settlement company to access his or her medical
records. In their "due diligence" the Senior Settlement
company will evaluate the insured to arrive at the cash
payout for the policy. Overall, it is a straightforward
process, depending on the Senior Settlement company you are
working with.
Funding companies may be able to help with getting this
information, but any of the above information included with
the application/release will speed up the process. Most
evaluations require 4-8 weeks, although sometimes it may
take longer to evaluate the insured.
Does A Senior Settlement Make Sense For You?
If you are over 65 years of age and have a life insurance
policy with a face value of $100,000 or more and believe
that you would rather have a lump sum of CA$H NOW rather
than to continue to make life insurance payments, a Senior
Settlement may be to your benefit. The ideal candidate for a
Senior Settlement is a retired business person or
entrepreneur, who at one time carried a large life insurance
policy to cover debts, but upon sale of the business or
retirement no longer needs that much insurance. Rather than
just letting the policy lapse for its cash value, it may be
possible to sell the policy for several times its cash
value. Other instances in which a Senior Settlement makes
sense is when your spouse has predeceased you and you no
longer need to provide coverage on your life or in a
situation where due to the increasing exemption on estate
taxes, you no longer need life insurance to pay the estate
tax.
To give you a better idea as to whether or not a Senior
Settlement make sense for you, listed below are some real
life examples of completed Senior Settlements and their
results:
Case History #1
Face Value: $750,000 Universal Life Policy
Age: 71 year old male
Health: Emphysema & Diabetes
Cash Value: $125,000
Senior Settlement: $185,000, or $60,000 more than the cash
value.
Details: Client purchased a paid up indexed annuity with the
proceeds.
Case History #2
Face Value: $7,500,000 Universal Life Policy
Age: 70 year old female
Health: History of non-malignant breast cancer
Cash Value: $30,000
Senior Settlement: $1,200,000, or $1,170,000 more than the
cash value.
Details: Purchased a $7,500,000 life policy that was $30,000
a year less expensive than the original policy.
Case History #3
Face Value: $3,000,000
Age: 73 years old
Health: No major health problems
Cash Value: $100,000
Senior Settlement: $350,000, or $250,000 more than the cash
value.
Details: Policy was under performing and was going to let
policy lapse, instead was able purchase $9,000,000 in
standard issue life insurance.
Sounds Interesting - - What Should I Do Next?
If you are over 65 years of age and have a life
insurance policy with a face value of $100,000 or more and
would be interested in the selling for a lump sum of CA$H
NOW, the first step is to call for a free preliminary
evaluation to determine if your policy is likely to be worth
more than it's cash value. After answering a few questions,
if it appears that your policy may be worth more than it's
cash value, it will be necessary to fill out a brief
application to get a free appraisal of its actual market
value. For more information call Ken Gain, President of Cash
Now Financial Corporation at (907) 279-8551 or contact him
by e-mail at kgain4cash@msn.com.
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