Life Settlement Policy FAQ’s

Why Would Someone Sell Their Life Insurance Policy?

There are many reasons someone would sell a life insurance policy, such as:

• Premiums have become unaffordable
• Term period or conversion privilege expiring
• Financial hardships are present
• Your business is sold or you retire and corporate coverage is no longer needed
• Change in estate value
• Long-term care is required
• Death of a spouse or divorce
• Policy has underperfomed
• Any change in the original need for coverage

What Types Of Life Insurance Policies Can Be Sold?

Generally, all types of life insurance policies can be sold including term, which may come as a surprise to consumers. Although term policies do not have cash value, they often have significant value as a life settlement.

How Much Money Will Sellers Get From A Policy With A Life Settlement?

Typically, a policy owner can expect to receive between 10% - 60% of their policy's death benefit. Please note that funders will typically pay an average of three to five times more than the existing cash surrender value.

*Deloitte Development LLC.(2005). The Life Settlement Market

What Happens To My Policy After A Life Settlement?

After a policy is sold, all rights and obligations of the life insurance policy are transferred to the new owner. Sellers are no longer responsible for paying premiums and are free to use the proceeds however they wish.

Are There Any Application Costs Or Medical Exams?

There are no application costs or medical exams required.

What Factors Go Into The Offer That I Will Receive?

The gross offer for your policy is based upon your age, your life expectancy, your premium costs, your insurance company’s rating and other policy details. While you will never pay out-of-pocket for any services, the net offer will reflect the fee earned by your life settlement broker.

What If I Change My Mind?

If you change your mind about selling your policy, you can cancel the life settlement contract at any time up to the end of the rescission period. Some states have a rescission period of three days, while others have a 15 to 30 day rescission period.

Are The Life Settlement Proceeds From Selling My Policy Taxable?

On May 1, 2009, the IRS issued two revenue rulings to clarify the income tax treatment to the surrender, sale and purchase of life insurance policies. Quantum Life Settlements strongly recommends consulting your tax advisor for more information. Click here for more life settlements tax information.

Have Other Life Settlement Questions?

Contact us and let us know how we can help.