Anchor Insurance

Life Settlement

A policyowner of a life insurance policy traditionally had few options for disposing his or her policy. The policyowner could surrender the policy for its cash surrender value or simply allow it to lapse for nonpayment of premiums. Nowadays, as a policyowner you have another option which can be financially beneficial. If you no longer need your existing life insurance policy, then you can sell it in the secondary market. Selling the policy can provide you portion of your death benefit in a lump sum during your lifetime.

In a secondary market, an investor, also known as life settlement provider, purchases a life insurance policy from a policyowner. The life settlement provider then is responsible for paying subsequent premiums. Upon the insured’s death, the settlement provider rather than the policyowner’s beneficiaries receives the policy’s death benefit.

Some reasons to sell an existing life insurance policy:

To obtain death benefit during the policyowner’s lifetime rather than upon death
The needs for which the policy was purchased have changed or no longer exist
The insured no longer has dependents
Premium increases make the coverage unaffordable
The owner perceives that the policy is underperforming

General qualifications to sell your life insurance policy:

age 65 or older
experienced a decline in your health

Advantages of Life Settlements:

To get lump sum during the policyowner’s lifetime rather than upon death
Proceeds received under life settlements are generally tax free to the policyowner selling the life insurance policy in the secondary market. Tax exemption is generally granted to settlements involving a terminally or chronically ill policyowner
Upon sale of the policy, life settlement provider places the proceeds of the settlement into escrow or in a trust account with an independent escrow agent who then makes the payment to the policyowner

Life Settlement

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