annuity settlement option

Seniors are looking at their life insurance policies in whole new way today. This new trend or market is called Life Settlement. Institutionally funded companies are buying existing life insurance policies of seniors. Sometimes the purchase amount can be for significantly more than the cash surrender value.

To qualify for this type of transaction the senior must be at least 65 years old. The purchaser of your policy will also consider the face amount, the premium amount, your (the insured) general health condition and the type of policy. Not all policies are deemed purchasable or worth purchasing by Life Settlement companies. In some cases, Life Settlement brokers can restructure your policy in a way that will make it more attractive to potential buyers. The broker may even have a relationship with an institutional investor or investors who purchase from them on a regular basis.

Industry sources reveal that different Life Settlement companies have different criteria or interests when they consider purchasing life insurance policies. If you use a broker, it is their responsibility to take your policy to as many purchasing companies as possible. In this way you will maximize your chance of getting an offer and get the highest possible offer. (Life Settlement companies purchase policies and Life Settlement brokers work with more than one purchasing company).

Here is how it works. You complete an application which includes medical and policy information release forms. No physical is required. After the broker receives your medical reports, they send your information to another company which makes some additional calculations. This information, along with some information from your insurance company regarding your policy, is packaged and sent for bids to different companies that might be interested in purchasing the policy.

If you receive an offer and agree to sell your policy, the funds are put in an institutional escrow account while the paperwork is completed. Payment is in the form of a lump sum. The purchasing company will then take over the premium payments. You are under no obligation to accept an offer if you do not wish to. You incur no cost for the process; the broker pays for the medical and other reports.

If you decide to sell your policy you can always use some of the proceeds to purchase a more cost effective policy to replace it. Thanks to the growing market of older people there are many more efficient and affordable policies out there to choose from for seniors. You could also use the money to purchase long term care insurance for yourself or invest in some other asset which could produce additional income.

.The insurance industry is very unhappy with the whole Life Settlement market because it cuts into their profits. The biggest insurer in the United State, American International Group, increased prices on some universal life policies for buyers more than 70 years in effort to discourage seniors from entering into these "spin life" deals. Additionally, in some states the insurance industry has proposed laws intended to outlaw spin-life investments or make it more difficult for investors to get payouts.

But the Financial Accounting Standards Board appears to be okay with these "spin life" deals because they recently issued rules permitting investors to record purchases of policies immediately as a profit, rather than forcing them to wait until the policyholder died.

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