Did you know a life insurance policy can pay for the costs of Retirement and Long-Term Care? Life insurance policies are one of the most valuable assets a person can own. They are also one of the most misunderstood and wasted. The majority of people don’t realize that their policy can provide a number of benefits while they are alive, and too often abandon the policy as seniors—unfortunately after making premium payments for years! Would you abandon your home without selling it after years of making mortgage payments? Of course not, and no one should abandon a life insurance policy after years of making premium payments either. It is critical that the owner of a life insurance policy understands that they can use their policy while still alive to help cover the expensive costs of retirement and long-term care. Life settlements are specifically designed to provide the maximum available value for the policy and address the unique financial and healthcare needs of seniors and people experiencing declining health. Don’t allow a life insurance policy to lapse or surrender without requesting a no-cost, no-obligation policy review to determine its life settlement value first! DID YOU KNOW? 1. Do you know who qualifies for a life settlement? First, remember this is an age and health driven financial option that primarily benefits seniors. In fact, think of the process as “Reverse Underwriting” where the older and sicker the insured is, the better they will do with a life settlement. The minimum age is 65, with the ideal age range being between 75 and 92. Also, this is for people with impaired, chronic or even terminal health diagnosis. Life settlements are for people with a measurable life expectancy range of 2-10 years. Any form of life insurance will qualify, with Universal, Term and Whole life the most common forms of insurance for life settlements. The minimum death benefit to make a life settlement work is $100,000 for any one policy to be considered. 2. Did you know a life insurance policy is legally recognized as an asset of the policy owner? This means the owner has the same personal property rights as the owner of a home. The owner can sell their policy if they want for its highest market value. A person wouldn’t abandon their house after years of mortgage payments, and the owner of life insurance policy shouldn’t abandon their policy after years of premium payments. 3. Did you know that according to industry studies, seniors on an annual basis own over $200B worth of life insurance policy death benefits that could potentially qualify for a life settlement? The danger for these seniors is that 9 out of 10 polices are in danger of being lapsed or surrendered before ever paying out a death benefit. It’s important for life insurance policy owners to understand that their policy may have considerable life settlement value before it would needlessly be lapsed or surrendered. 4. Did you know settling a life insurance policy can be a quick and easy process that starts with a no-cost, noobligation policy review? The review includes policy owner information and a copy of the policy to get started. Depending on the Life Settlement Solution that best matches the policy type and owner’s needs, medical underwriting may or may not be necessary. And depending on the settlement solution, the entire process can take anywhere from 3090 days.
5. Did you know a life settlement can help the owner of a life insurance policy struggling with the effects of aging or failing health to get the highest value from their policy instead of allowing it to lapse or surrender? When thinking about who would qualify for a policy settlement think of the process as reverse underwriting. The older and sicker a person, is the higher value they will receive from their policy settlement. People age 70 and above, or who are chronic, critical, or terminal in their health condition are most appropriate for this option. 6. 7- Did you know many forms of life insurance will qualify for a life settlement, but not every policy will work? As a general guideline, Universal Life policies and convertible term life policies are the two most common types that will qualify for a traditional settlement. Term policies past their convertibility period are possible, but the insured’s remaining life expectancy would have to be very short. Whole Life policies are eligible for a Reverse Settlement based on the Case Surrender Value instead of the death benefit. Variable life can qualify, but because they are regulated as securities, they are very complex transactions. A second-to-die policy could work usually after the first insured has passed away. Overall, policies that were originally issued as standard or preferred, and with a premium to death benefit ratio under 6% will most likely price for life settlement value. 7. Did you know the funds from a life settlement can be tax-free? If the policy owner is diagnosed with chronic health conditions (2 ADL’s or more) or terminal conditions (2 years or less of life expectancy), the funds received from the settlement of their policy are HIPAA exempt from Federal taxes. Also, any funds received at or below the basis that the policy owner has in their policy is exempt from taxation. Basis in a policy is the equivalent of how much in premium payments have been made over the life of the policy. Anything received above basis in the policy that does not meet the HIPAA exemption, is taxed as capital gain. This information is intended to be a guideline and not tax advice which should always be sought from a certified tax advisor. 8. Did you know life settlements provide “after-market” options to exchange a death benefit for living benefits for policies originally sold without those options to address health and long-term care expenses? Many insurance and annuity products sold today offer living benefit riders and conversion options to address financial challenges related to critical illness and long-term care. People understand the value of maintaining death benefit protection for their families while they are young and healthy, but then later having the flexibility to switch from a death benefit to a lump sum or living benefit to address the challenges of aging. Now with life settlement, seniors can elect to settle a policy at absolutely no cost for a lump sum and living benefit options to address their financial and healthcare needs-- with no more premium payments. 9. Did you know that government leaders support life settlements to pay for long-term care? A watershed event for the life insurance industry, and people in need of long-term care occurred when the National Association of Insurance Commissioners (NAIC) released their policy paper endorsing life settlements as a viable option to help people pay for long-term care. Soon after, Congress followed up by introducing H.R. 5958, the “Senior Health Planning Account Act”, a bi-partisan bill to create a LTC-HSA as a tax-free vehicle for seniors to roll over their proceeds from an LTC-Life Settlement into a “Senior Heath Planning Accounts” (SHPA) to pay for health and long-term care expenses. LifeCare Xchange: LifeCare Xchange is the only Life Settlement Marketing Organization (LSMO) in the insurance industry. Our mission is to work with agents, advisors, and our IMO/BGA partners to build a network of Appointed Referral Agents who are educated and supported to offer the life settlement option to policy owners contemplating lapse or surrender. We also work with independent agents, financial advisors, lawyers, accountants, and long-term care industry service providers. With LifeCare Xchange, we can rescue thousands of policies every year, and in the process, deliver a recurring revenue stream to your organization. www.lcxlife.com