Frequently asked questions

1. What is a life settlement?
A life settlement (referred to as viatical settlement in some states) or senior settlement, as they are sometimes called, involves selling an existing life insurance policy to a third party – a person or entity other than the company that issued the policy – for more than the policy's cash surrender value, but less than the net death benefit.

Life settlements benefit senior citizens by offering a valuable option for an unneeded or unwanted life insurance policy over the alternative of surrendering it for the policy's cash surrender value (if any) or allowing it to lapse.

2. Why would I sell my life insurance policy?
A life settlement may make sense for you if you no longer need or want your current policy, or if you no longer can afford the expense of paying insurance premiums and are willing to give up or replace coverage. Every individual should consider his or her own unique circumstances before selling a life insurance policy. 

3. Would I still make the remaining premium payments?
No, once the policy is sold you are no longer responsible for any of the future premium payments.

4. How much is a policy worth?
The amount paid to a seller depends on several factors, for instance the medical condition of the insured, the amount of premium payments necessary to keep the policy in force and the face value and cash surrender value of the policy.

5. When should I consider a life settlement?

• When you are 55 years of age or older
• When a policy is lapsing or being surrendered
• When there is no longer a need for the security that the policy provides
• Premiums have become unaffordable
• Funds are needed to pay for long-term care or health care costs
• Financial hardships are present
• When there is a need for new life insurance, annuities or long-term care
• When the insured has outlived his or her beneficiaries
• When a charitable organization that owns a donated policy no longer can maintain premium payments
• When there is a liquidation of assets due to bankruptcy
• When there is a retiring executive covered by a key-man policy

6. What about my privacy?
Consumer privacy is very important to the us. We have privacy, anti-fraud and security measures in place to safeguard your personal information.

7. What are the tax consequences of a life settlements transaction?
In general, the proceeds of a life settlements transaction may be subject to federal and state taxes:

Tax free up to the amount invested (your basis in the policy, which is typically the total dollar amount of premiums paid into the policy less any distributions)

Taxed as ordinary income up to the cash surrender value

Taxed as capital gains in excess of the cash surrender value