A typical Life Settlement client is 65 Years of age, and owns a Life Insurance policy with a death benefit of $250,000 or more.  Persons under the age of 65 may qualify if their life expectancy is less than 12 years.  Policy valuation is contingent on many drivers.  Some of the more common drivers are:  age, health status, life expectancy, amount of death benefit, annual premium, Life Insurance Company rating, and the number of years the policy has been inforce. A Life Expectancy Report can be an important tool for determining a policies market value.

A Life Expectancy report is a third party calculation based on an insured’s medical records, age, etc…  It’s a determination of the average time an insured is expected to live.  Each Life Expectancy Company calculates life expectancy differently.  It’s common for Insured’s to obtain more than one life expectancy report.  These reports are not free but can help an Insured receive a higher offer.  However, if the Life Expectancy Report comes back with a high or long life expectancy that can cause the market value of the policy to decrease.

The following is an overview of the Life Settlement process:

Qualify

Qualification is an important step because Life Settlement is not the right choice for everyone 65 and over who has a $250,000 insurance policy.  There are many variables that determine the value of a Life Settlement.  Expectations should be discussed in the Qualifying process.

Application

A Life Settlement application must be completed by the policy owner.  In the Application package there are also several other documents for the policy owner, insured and beneficiary to review, complete and sign. Such as:

• Authorization to Release Policy Information
• Authorization for the Disclosure of Protected Health Information (HIPPA)
• Notice of Disclosure

Underwriting

Insured’s medical records will be gathered and reviewed.  In some cases a Life Expectancy Report will ordered.  The Life Insurance Carrier will be contacted to verify and gather information on the policy.

Analysis

When all the requested and necessary information is received the policy is reviewed and a valuation is determined.  Every policy is unique but the valuation is dependent on:  age, health, life expectancy, amount of death benefit, annual premium, and Insurance Carrier rating.  There are secondary variables to consider as well.

Offer

Policies will be presented to Investors and offers will be made.  The policy owner can select or reject any offer.

Closing

Once the policy owner accepts an offer the closing process begins.  In most cases a Provider will handle the closing.  The Provider creates a Life Settlement contract and manages the transaction.  The Provider verifies that all documentation is in good order according to state and federal statues, laws and regulations regarding consumer protection, life settlement and life insurance.  The Provider also verifies the Life Expectancy report if one was obtained along with a comprehensive review of the policy to verify the fair market value of the offer.

Purchase and Sale Agreement

Policy owner accepts an offer, the Provider prepares the Closing Package.  The Closing Package contains the Purchase and Sale Agreement along with various other documents.  These documents are reviewed, signed and notarized by the policy owner, insured and beneficiary.  The Provider countersigns the Closing package upon due diligence completion.

Provider notifies the Investor (buyer) to escrow the funds.  An Independent escrow agent is used to handle funds.  This is a 3^rd party designated by the Provider and recognized by state governing authority (Insurance Commissioners) to accept, transmit, and pay the proceeds of a Life Settlement.

Notification

Insurance Company is notified at this point to change the ownership and beneficiary to the new owner and beneficiary.  Insurance Company specific forms are required along with the signatures of the policy owner, insured and beneficiary to complete these changes.  These forms are part of the Closing Package.  Once the Insurance Company processes the change of ownership and change of beneficiary forms they will send out verification updating the policy with the new owner and new beneficiary.

Funds Transfer

The escrow agent will release the funds to the policy owner once written confirmation of the change of ownership and change of beneficiary have been received.

Life Settlement allows for policy owners to tap previously unrealized value in their unwanted, unaffordable, or underperforming Life Insurance policies.  A Life Insurance policy can be liquidated for fair market value and the proceeds redistributed to address current financial planning goals such as retirement income, long term care, annuity, vacation or anyway you please.