How to Get a Life Settlement Offer

September 13, 2023 | By Adam Lippman

How to Get a Life Settlement Offer

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Life insurance is one of the best ways to leave a death benefit behind to support your loved ones. However, circumstances can change, and if you or your loved ones no longer need your policy, or you want access to the cash, you could consider a Life Settlement. Many life insurance policies lapse or are surrendered every year, most of which could qualify for a Life Settlement where the policy owner could access the money.

While there are significant benefits, getting a Life Settlement offer requires careful management to ensure a fair and accurate amount. Understanding the process and who to work with is vital to a successful transaction.

What Is a Life Settlement?

A¬†Life Settlement involves selling¬†your life insurance policy to a third party for a lump sum payment. The amount you receive depends on several factors, including your policy’s value, terms, and conditions, as well as your age and health. A Life Settlement payment is more than you would receive if you cancel or surrender the policy but less than the death benefit specified in your insurance policy.

The entity that purchases your life insurance policy becomes the owner and beneficiary, takes over paying the insurance premiums, and receives the death benefit when you pass away. A Life Settlement differs from a Viatical Settlement, which applies when the policy owner has a terminal illness and chooses to sell their policy to cover medical and other expenses. Viatical Settlement proceeds are often exempt from federal tax, whereas Life Settlements are taxable.

Do You Qualify for a Life Settlement?

Before finding a Life Settlement offer, you must establish whether you are eligible for one. Eligibility often depends on the following:

  • Age:¬†You must be 65 or older, unless you have signficant health impairments.¬†
  • Policy:¬†Your life insurance policy should have a minimum death benefit of $100,000.¬†

Most older adults qualify for a Life Settlement, but depending on where you live, you may have to adhere to additional state and local laws, including a mandatory waiting period. It is always best to discuss the implications with your financial advisor and settlement broker before you make your final decision. 

Find Out What Your Policy is Worth

Why Consider a Life Settlement?

The principal advantage of a Life Settlement is getting a payout you¬†can use however you choose¬†‚ÄĒ like covering medical costs, providing support to loved ones, or taking the vacation of your dreams. You might consider a Life Settlement for several reasons, including the following:

  • The rising cost of life insurance premiums puts you under financial strain.¬†
  • Your beneficiaries are independent, and you no longer need life insurance.¬†
  • You need money for medical bills or unexpected expenses.
  • You want to fund some of your retirement goals.¬†
  • You need to supplement your current savings.¬†

As a Life Settlement offers more value than lapsing or surrendering your policy, it could be a highly beneficial option that grants you access to your money when you need it the most so you can use it how you want. 

How to Get the Best Life Settlement Offer

While a Life Settlement offer can provide you and your loved ones with a much-needed financial reprieve, it’s essential to understand you will only receive a percentage of the policy’s total value when you sell. Ensuring you get the best possible offer on your policy is critical, and it is best to find a settlement broker you can trust to help you. When you work with such a provider, getting the best settlement offer is significantly more straightforward.¬†

In general, you will progress through the following steps:

1. Determine Whether You Qualify

The first step to getting the best offer on your life insurance policy is to talk to a trustworthy settlement broker and determine whether you qualify. They will explain your Life Settlement options to you, and together, you can examine your circumstances and determine whether a Life Settlement is a positive move. When you talk to your provider, ensure you ask the following questions:

  • Do you have a license in my state?¬†Many states require Life Settlement providers to have a license.
  • What is the best price I can get for my policy?¬†Ask your settlement broker what bids they expect to receive on your policy. They may settle on a different figure than they provided you in your early conversations, but having a general idea allows you to plan better.

Working with a settlement broker is one of the most effective ways to maximize your policy's value. The settlement broker represents the policy owner and is obligated to act in your best interest.

Working with a settlement broker is one of the most effective ways to maximize your policy’s value. The settlement broker represents the policy owner and is obligated to act in your best interest. Licensed brokers have the skills and experience to connect with the most qualified buyers.

Find Out if You Qualify for a Life Settlement

2. Submit to a Review and Evaluation

Once your broker has received your initial request, they begin gathering information from you and looking for prospective buyers. In this review and evaluation phase, some of the steps your broker takes include:

  • Gathering medical records:¬†Your settlement broker will gather your existing medical records from your health care team so you can complete this process without undergoing a medical exam.
  • Conducting a mortality analysis:¬†Your life expectancy affects the value of your policy, so your broker will work with more than one team of experts to establish a fair and accurate report.
  • Valuing your policy:¬†Your broker will work with your insurance carrier to analyze your policy’s value to determine the best way to present it to prospective buyers.
  • Finding buyers:¬†Your broker will look for buyers interested in purchasing your policy.
  • Presenting the case:¬†In this phase, your broker should update all your policy information before submitting it to prospective purchasers. With this up-to-date information, they can develop a strategy to maximize its value.
  • Negotiating:¬†The more competition there is for your policy, the more prospective buyers are willing to pay, so your broker will work hard to get competing bids and the highest possible price for you.
  • Discussing your offer:¬†When your broker has obtained what they believe is the best offer on your policy, they will present it to you so you can decide whether you want to complete the transaction.

3. Accept Your Offer

If you decide to proceed with the transaction, your broker will present you with contracts from your buyer. Once you have signed and returned them, several checks and balances ensure your sale can be completed. These include change of ownership, beneficiary forms, and collection of outstanding items.

You can receive your cash settlement once you have all agreed and signed the relevant paperwork. After receiving your money, you enter a rescission period ‚ÄĒ the period in which you can change your mind. This period varies by state but is often around 15 days.

The process of selling your life insurance policy depends on many variables, including your insurance, gathering your medical records, and the time it takes to find the right buyer. However, it takes six to eight weeks on average from start to completion, after which you can use your lump sum as you choose.

Get the Best Life Settlement Offer With Settlement Benefits Association

Get the Best Life Settlement Offer With Settlement Benefits Association

Getting a Life Settlement offer can be challenging, especially if you try to negotiate it alone. Settlement Benefits Association is here to represent you as the policy owner, and we pride ourselves on serving you, our client. While this may be a once-in-a-lifetime transaction for you, we have decades of experience helping our clients get the highest possible offer on their life insurance policies.

Settlement Benefits Association was founded in 2002. Use our Visual Valuator to get a general idea of what your policy is worth, or contact us to start getting a Life Settlement offer today.

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