There are still many people who mistake a life insurance settlement option with a senior viatical transaction. This confusion is understandable since the life settlement market developed out of the viatical industry and the asset the life settlement agent is assisting you to sell is an insurance policy. However, unlike the senior who sells their insurance policy in a life settlement, a senior viatical involves a person that has a terminal illness with a life expectancy of 24 to 36 months or less. Therefore, the definition of a viatical is a transaction involving a terminally ill individual who sells the ownership and beneficiary rights of their life insurance policy for a lump sum of cash. Viatical settlement first arose in the late 1980's out of the context of HIV patients who wanted to convert their life insurance policies into cash via a senior viatical. The viatical industry still exists today on a very limited basis with fewer viatical life settlement transactions and viatical life settlement providers, while the life settlement industry continues to grow exponentially. The life settlement broker assists seniors clients age 65 and over with an average longevity of greater than two years. Therefore, the age and health of the insured is one of the key qualifying determinant.

Life settlement proceeds paid to seniors may often vary between 10 and 30% of the coverage amount. This amount will vary widely based on health, premium costs and policy characteristics. The older the individual, the poorer the health, the higher amount the policy could sell for. As more seniors learn of their options regarding their unwanted policies, they are now beginning to recognize their insurance policies are appreciating assets.

The amount of the life settlement sales proceeds will vary greatly depending on a combination of the following variables: the age of the insured, the health of the insured, the size of the policy, the premium costs of the policy, and market conditions (supply and demand) and the life settlement broker (or method) used to shop your policy. A medical exam is not required.

Ruling by Justice Oliver Wendell Holmes (Grigsby v. Russell, 222 U.S. 149 (1911)

Millions of seniors are unaware that their life insurance is an asset, like a home or an investment portfolio. And like any piece of personal property, the asset of an insurance policy can be sold. A life insurance settlement option can make this possible for you.

Life Insurance coverage is a valuable tool however, when circumstances change, and a life insurance policy is no longer needed, wanted or affordable, historically seniors have allowed the policy to lapse or be surrendered back to the insurance company for a pre determined amount (the Cash Surrender Value). Seniors have another option: to sell their policy to a financial institution for a cash settlement. Once the policy is sold, you will no longer be required to pay the on going premiums. The settlement amount is more than the value you would have received if you would have surrendered the policy or allowed it to lapse. This sale is called a "Life Settlement". How much would the settlement amount be? Appraise your policy now to discover its value. A life insurance appraisal can be calculated in a few seconds after you answer some very basic questions about your policy, age and health. You will not be required to enter personal information to obtain your results. To begin your life insurance appraisal now click here.

Source Conning and Company report released in Dec. 1999

The proceeds from a life settlement are not restricted in their use. Some of the common uses for life settlement proceeds include:

• Purchase long-term care insurance
• Eliminate debt
• Contributions to charity
• Invest in stocks, bonds or mutual funds
• Purchase "replacement" life insurance that is more applicable and use proceeds to eliminate or greatly reduce future premiums
• Purchase an annuity for a guaranteed income stream

If you have an insurance policy that you no longer want need or can afford, some of the options below maybe available to you. Please speak to your trusted advisor or the issuing insurance carrier to determine all of your options before surrendering or a lapse of your policy.

1. Lapse - A period during which an insurance policy is not in effect due to a failure to pay the insurance premiums. This occurs when you quit paying the premiums to the insurance company and the cash value in the policy will no longer support premiums. If a term policy lapses at the end of its term, the policy owner will no longer have insurance coverage on the insured and they will not receive any money from the insurance company upon the lapse. (Note: Most term polices can be sold in a life settlement because they can be converted to permanent insurance)
   
2. Surrender - This involves contacting the insurance company informing them that you no longer want the insurance coverage and would like them to return to you the cash that has built up inside the policy (accumulation value). The cash surrender value is the amount of money given to the policy owner upon the surrender of the policy before the maturity date of the policy. A term policy has no cash surrender value.
   
3. Sell your policy in a Life Settlement- Insurance is considered personal property, and like other assets, it too can be sold on the secondary market if it is no longer wanted, needed or affordable. A life settlement is the sale of a policy by the policy owner for a cash settlement that is usually greater than the current cash surrender value. A life insurance appraisal can be completed in seconds and can be generated by answering some very basic questions about your policy, age and health. Insurance Appraisal will not require you to submit your personal information to obtain an appraisal. To begin your life insurance appraisal now click here
   
4. Decrease face (or coverage) amount to reduce premium payments - Depending on the type of policy (only applicable for universal life policies) you may be able to lower the amount of coverage (or death benefit amount) thereby lowering the premium payment amounts. After the coverage is reduced, you will not be able to increase it again without applying for new coverage and proving your insurability. Therefore please consult with a licensed insurance agent before making any changes to your policy.
   
5. Get a loan to pay premiums (or premium finance) a new policy - In certain circumstances (especially with high net worth seniors) it becomes possible to finance or borrow the money to pay your life insurance premiums. Many times the lending institution will require you to post some of your liquid and non-liquid assets as collateral for the loan. By financing a policy's premiums, a policy owner can free up the cash for other needs or investments.
   
6. 1035 Exchange - (or 1035) refers to a tax code provision that allows policy owners to request a transfer of the accumulated funds within their life insurance policy to a different life insurance policy, endowment policy or annuity policy, without creating a taxable event. Basically this consists of moving the cash that has built up in one policy into a new policy (or other insurance product such as an annuity). This can allow a policy owner to acquire a more suitable insurance product.
   
7. Accelerated Death Benefit (terminally ill only) - In the event the insured becomes terminally ill the insurance company will often provide a portion of the face amount or coverage to the policy owner in advance. These funds can be used to assist with medical expenses and other needs and are usually available tax free (please consult with your tax advisor or insurance carrier). Terminally ill is often defined as having a condition which results in a life expectancy prognosis of two years or less.

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