Life Settlements might seem not at all morbid to some Boca Raton residents but they mean big bucks for those who understand how to sell their unwanted life insurance contracts. Owners of life insurance policies who may or may not be the insured can sell ownership interest to a non-related third party. The life insurance sales proceeds are considered ordinary taxable income with premiums paid equal to the cost basis for determining the gain from the sale.
What types of Policies are Eligible?
Life insurance policies that are good candidates for sale in a life settlement transaction are those that have insured that have an actuarial age older than 70. Life expectancy is an important consideration because of the number of years the investor will have to continue premium payments before the insured dies and the policy death benefits are paid. For instance, an individual may be age 65, but unfortunate have a poor health history which shortens their life expectancy.
The best life insurance owners who are candidates for life insurance settlements are those with policy premiums that are not affordable, insurance need gone, insurable interest no longer exist. Term insurance policies that have a conversion to a permanent policy have substantial value. A divorced person who owns a term life insurance policy on an ex-spouse as a result of divorce settlement may not be able to afford premiums after the term period. Changes in the credit shelter amount for estates up to $5.49 million ($10.98 million married) in 2017, have reduced the need for estate liquidity from Irrevocable Life Insurance Trusts (ILITs). Finally, corporations that own life insurance policies to fund buy sell agreements or key man indemnity coverage may no longer have an insurable interests.
How to Negotiate the Sale of a Life Insurance Policy
The benefits paid to life insurance policy owners in life settlement transaction may result in a significant amount of money which can be used for many purposes including, long term care, retirement income, medical expenses and corporate cost recovery. The only way to negotiate the sale a life insurance policy is through an arms-length transaction, where there is an auction that bids to purchase the life insurance contract and the assessment of the insured’s health is done by an independent medical examiner. True North Financial Advisors has the experience and brokerage capabilities to help you negotiate the sale of your unwanted life insurance policy.
Policy Evaluation is the First Step
Every asset’s valued should be known by its owner. You know the value of your life insurance policy at the death of the insured. True North Financial Advisors, located in Boca Raton, Florida can help you determine the value of your life insurance policy if you sold it today. After a complete policy evaluations, a preliminary non-binding offer price quote can be determined to enable a financial advisors to help in the decision to initiate the life settlement transaction process.
