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insure.com - Life Insurance and Annuities FAQ
Can I challenge a beneficiary?
How can I find out if my deceased relative had life insurance?
Can I borrow money against my life insurance policy?
If I'm a beneficiary, do I have to pay income taxes on a death benefit?
Do all life insurance companies require a physical exam?
Is the cash value of a life insurance policy free from creditors if the insured files for bankruptcy?
What do the terms "churning" and "vanishing premiums" mean?
If my application for life insurance is rejected because of poor health, are there any other companies that will insure me?
How quickly do insurance companies usually settle life insurance claims?
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What are the tax implications of transferring cash value life insurance, annuities, or 401(k) money?
Can I sell my life insurance?
Are there any consequences for lying on your life insurance application?
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Results from search: http://www.iid.state.ia.us/division/consumer/undviat.asp
Selling Your Life Insurance Policy: Understanding Viatical Settlements
find it!
Selling Your Life Insurance Policy: Understanding Viatical Settlements
Defining the Terms
A viatical settlement is the sale of a life insurance policy to a third
party. The owner ( viator ) of the life insurance policy sells the policy
for a percentage of the death benefit. The buyer becomes the new owner and/or beneficiary
of the life insurance policy, pays all future premiums, and collects the death benefit of
the policy when the insured dies. In the past consumers with a life-threatening illness
have sold their insurance policies in return for immediate cash. A healthy person might
also sell his life insurance policy to get cash.
A viatical settlement provider is the person or company that buys the
life insurance policy from the viator.
The person or company who represents the seller and can "shop" for viatical
offers is a viatical settlement broker . The provider pays the broker a
commission if the sale is completed.
Consumer Alert
Check out all of your options before deciding to sell your policy . A
viatical settlement may or may not be the right choice for you. Your state insurance
department, along with the National Association of Insurance Commissioners, is concerned
that many consumers may not fully understand viatical settlements. Please continue reading
before you make any decisions.
If you're interested in selling your life insurance policy, you should contact your
state insurance department to get more information.
If you've been contacted by someone who wants you to buy a policy and then sell it
immediately, you should contact your state insurance department. It's possible you're
being targeted to participate in fraud.
If you're asked to invest in or buy a viatical settlement, we recommend you contact your
state insurance department. Learn more about the issues and risks.
Your state insurance department may regulate viatical settlement transactions. Contact
your state insurance department for a copy of those regulations.
Questions to Consider
Do I still need life insurance protection?
If I sell my policy, how do they decide how much cash I get?
Is this an employer or other group policy? If so, do I need their permission to sell it?
If I sell my policy, who will be the legal owner?
Do I need the advice of a tax or estate planning advisor before I decide to sell my
policy?
Will investors have specific information about me, my family or my health status?
Is the broker or company I plan to sell to allowed to do business in my state?
After I sell my policy, can it be resold by the buyer?
Consider All Of Your
Options
If you're selling your policy to get cash to pay expenses, check all of your options. It's
likely you'll find another way of getting cash that costs less than a viatical settlement.
Consult your own financial advisor, who knows your personal financial needs.
Ask your insurance agent or company if you have any cash value in your life insurance
policy. You may be able to use some of the cash value to meet your immediate needs and
keep your policy in force for your beneficiaries. You may also be able to use the cash
value as security for a loan from a financial institution.
Find out if your life insurance policy has an accelerated death benefits provision. An
accelerated death benefit is a feature of a life insurance policy that typically pays some
or all of the policy's death benefit before the insured dies. It may be a way for you to
get cash from a policy without selling it to a third party.
Other Considerations
Contact a professional tax advisor. Find out the tax implications. Not all proceeds are
tax free.
Know that the proceeds are subject to the claims of any creditors.
Find out if you'll lose any public assistance benefits such as food stamps or Medicaid
if you get a cash settlement.
Know that you must provide certain medical and personal information.
Consumer Tips
Understand how the process works and
when each step will happen.
Decide whether to sell your policy
directly to a viatical settlement provider or to go through a viatical settlement broker
who will do the comparison shopping for you.
If you don't use a viatical settlement
broker, comparison shop on your own.
You don't have to accept any viatical
settlement offer.
Check all application forms for
accuracy, especially information about your medical history.
You must be truthful in your answers to
application questions.
Make sure the viatical settlement
provider agrees to put your settlement proceeds in escrow with an independent party or
financial institution to make sure your funds are safe during the transfer.
Find out if you have the right to
change your mind about the viatical settlement after you get the proceeds. If you have
that right, you'll have to return the money you were paid and the premiums paid for you.
In many states you have the right to change your mind for a certain period of time.
Understand what information a viatical
settlement provider must know about you to buy your policy, and who else might get that
information.
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Results from search: http://i-netsettlements.anthill.com/i-netsettlements-anthill-com/faq.htm
Seniors, sell your existing life insurance policy for more than it's cash value by doing a Viatical or Life Settlement.
Frequently
Asked Questions
When should I consider selling my life insurance policy?
When
you no longer need it, want it or can afford it.
When
there is a financial need.
When
the only other option is to let the policy lapse.
Who
might qualify for a Life Settlement?
Individuals
over the age of 65, regardless of health. Each case will be
evaluated on an individual basis.
What
type of insurance can be sold?
All
types of life insurance from a rated insurance company can
be sold. This includes term life, universal life, whole life,
variable life and survivorship policies. However, the policy
must be at least two years old.
The
policy must have a death benefit of at least $100,000.
Will
I need to take a medical examination?
No new medical examination is necessary. All of the necessary
medical information will be in your current medical records.
How
much cash would I receive for my insurance policy?
The
settlement amount is a percentage of the death benefit of
the policy and is determined on an individual basis. The settlement
amount is determined by analyzing many variables including:
age and health of the insured, amount of premiums required
to maintain the policy, cash value in the policy, type of
policy and rating of the insurance carrier.
Who
pays the premiums after the policy is sold?
The settlement company that purchased the policy is the new
owner of the policy and will pay all future premium payments..
Can
a policy be sold that has a loan against it?
Possibly.
The loan value will be factored into the purchase price of
the policy.
Will
the proceeds I receive from the sale of my policy be taxable?
Possibly.
All cash received between the total amount of premiums paid
and the cash surrender value of the policy is currently taxed
as ordinary income. All cash received greater than the cash
value is taxed as a capital gain.. However, if the insured
has a life expectancy of two years or less, the transaction
is tax-free. Policyholders should consult with their tax advisor
to confirm their own tax situation
Example:
$1,000,000 life
insurance policy
Policy is sold
for $200,000
$50,000 in premiums
paid over 10 years
$60,000 cash
surrender value
The Heritage
Group Agency, Inc.
3240 W. Britton, Suite 105
Oklahome City,OK 73120
(405) 753-9100
Toll Free - (800) 460-1991
Click
here to email us.
Results from search: http://law.freeadvice.com/insurance_law/life_insurance_law/
Life Insurance Law: Free Legal Information
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General Life Insurance Questions
LIFE INSURANCE SEEMS COMPLICATED -- WHAT ARE THE BASICS?
WHAT IS INDIVIDUAL LIFE INSURANCE?
WHAT FACTORS ARE CONSIDERED IN INDIVIDUAL LIFE INSURANCE UNDERWRITING?
IS A PHYSICAL EXAM NEEDED?
WHAT IS GROUP LIFE INSURANCE?
WHAT IS A LIFE INSURANCE POLICY?
CAN I BUY A POLICY ON SOMEONE ELSE'S LIFE? WHAT IS AN "INSURABLE INTEREST"?
WHAT IS AN "INSURABLE INTEREST"?
CAN I NAME ANY BENEFICIARY I CHOOSE?
WHAT HAPPENS IF THE INSURED PERSON DIES?
WHAT AM I REQUIRED TO DO WHEN I HAVE A CLAIM?
DO I NEED A LAWYER TO HELP ME FILE A DEATH CLAIM?
WHAT PROBLEMS MIGHT WE RUN INTO WHEN FILING A DEATH CLAIM?
CAN A LIFE INSURANCE COMPANY DENY A CLAIM ON A VALID POLICY IF THE INSURED DIES?
WHAT IF THE INSURED LIED ABOUT A HEART ATTACK?
WHAT IF THE INSURED LIED ABOUT HIS AGE?
WHAT IF THE INSURED LIED ABOUT HIS SMOKING?
WHAT ARE "EXCLUSIONS" AND "LIMITATIONS" AND HOW DO THEY AFFECT MY LIFE INSURANCE COVERAGE?
IF I THINK CERTAIN WORDS IN MY POLICY MEAN SOMETHING DIFFERENT FROM WHAT MY INSURANCE COMPANY SAYS THEY MEAN, HOW DO WE RESOLVE IT?
WHY ARE LIFE INSURANCE COMPANIES REGULATED BY THE GOVERNMENT?
WHO REGULATES THEM?
CAN AN INSURANCE COMPANY REFUSE TO SELL ME INSURANCE FOR ANY REASON IT CHOOSES?
ARE THERE ANY LIMITATIONS ON WHAT AN INSURANCE COMPANY CAN CHARGE FOR INSURANCE?
CAN AN INSURANCE COMPANY CANCEL MY POLICY FOR ANY REASON IT CHOOSES?
CAN I CANCEL MY POLICY AT ANY TIME AND WILL THERE BE A PENALTY?
IF I MISS A PREMIUM PAYMENT AND GET A CANCELLATION NOTICE, IS THERE ANYTHING I CAN DO TO BE ABLE TO KEEP THE POLICY?
I HAVE A LARGE TERM-LIFE POLICY IN WHICH MY SISTER AND BROTHER-IN-LAW ARE SOLE BENEFICIARIES. ON MY BEHALF, THEY ARE PAYING THE ANNUAL PREMIUM. ARE THERE ANY TAX
CONSEQUENCES IF THEY REMAIN (1) BENEFICIARIES OR (2) JOINT OWNERS OF THE POLICY? IS IT NECESSARY TO INFORM THE INSURANCE COMPANY THAT MY BENEFICIARIES ARE PAYING THE
PREMIUM?
SHOULD A MINOR CHILD BE NAMED AS A BENEFICIAIRY OF LIFE INSURANCE PROCEEDS?
I AM PRETTY SURE THAT MY DECEASED GRANDMOTHER HAD A LIFE INSURANCE POLICY, BUT I HAVE NO PAPERWORK OR OTHER RECORD. IS THERE A WAY THAT I CAN FIND
OUT?
MY FRIEND WAS A BENEFICIARY ON HER EX-HUSBAND'S LIFE INSURANCE POLICY. IN TRYING TO COLLECT FOR FUNERAL EXPENSES, SHE WAS TOLD HER DIVORCE RELEASED HER AUTOMATICALLY AS A
BENEFICIARY. WHY?
WHEN I WAS MARRIED TO MY EX, OUR WILLS LISTED OUR CHILDREN TO RECEIVE OUR LIFE INSURANCE. NOW I HAVE REMARRIED BUT HAVE NOT CHANGED MY ORIGINAL WILL. IF ANYTHING HAPPENS
TO ME, WOULD MY EX AND HIS KIDS REAP THE BENEFITS OF THE LIFE INSURANCE MONEY?
Beneficiaries
CAN I NAME ANY BENEFICIARY I CHOOSE?
I PURCHASED A LIFE INSURANCE POLICY TO BE USED FOR MY CHILDRENS' COLLEGE EDUCATION. I DON'T KNOW HOW TO SAFELY DESIGNATE HOW THE MONEY SHOULD BE GIVEN OUT. CAN I JUST NAME
AN EXECUTOR?
I HAVE A LARGE TERM-LIFE POLICY IN WHICH MY SISTER AND BROTHER-IN-LAW ARE SOLE BENEFICIARIES. ON MY BEHALF, THEY ARE PAYING THE ANNUAL PREMIUM. ARE THERE ANY TAX
CONSEQUENCES IF THEY REMAIN (1) BENEFICIARIES OR (2) JOINT OWNERS OF THE POLICY? IS IT NECESSARY TO INFORM THE INSURANCE COMPANY THAT MY BENEFICIARIES ARE PAYING THE
PREMIUM?
SHOULD A MINOR CHILD BE NAMED AS A BENEFICIAIRY OF LIFE INSURANCE PROCEEDS?
WHEN I WAS MARRIED TO MY EX, OUR WILLS LISTED OUR CHILDREN TO RECEIVE OUR LIFE INSURANCE. NOW I HAVE REMARRIED BUT HAVE NOT CHANGED MY ORIGINAL WILL. IF ANYTHING HAPPENS
TO ME, WOULD MY EX AND HIS KIDS REAP THE BENEFITS OF THE LIFE INSURANCE MONEY?
MY FRIEND WAS A BENEFICIARY ON HER EX-HUSBAND'S LIFE INSURANCE POLICY. IN TRYING TO COLLECT FOR FUNERAL EXPENSES, SHE WAS TOLD HER DIVORCE RELEASED HER AUTOMATICALLY AS A
BENEFICIARY. WHY?
AFTER MY FATHER DIED, WE FOUND 2 LIFE INSURANCE POLICIES WHICH MY MOTHER COLLECTED ON. WE HAVE REASON TO BELIEVE SOMEONE MAY HAVE HAD AN ADDITIONAL INSURANCE POLICY AND
COLLECTED THE BENEFITS. IS THERE ANY WAY TO FIND OUT IF THERE WAS AN INSURANCE POLICY, WHAT WAS THE COMPANY, AND WHO COLLECTED THE BENEFITS?
WE ARE MISSING THE STATEMENT OF BENEFICIARY FROM MY FATHER'S LIFE INSURANCE POLICY. AS A CONSEQUENCE, THE INSURANCE COMPANY WANTS TO PAY THE BENEFITS TO MY FATHER'S ESTATE.
IS IT NOT THE RESPONSIBILITY OF THE INSURANCE COMPANY TO MAKE SURE THAT BENEFICIARIES ARE DESIGNATED FOR THE POLICIES THEY SELL?
IN 1993 I WAS MADE BENEFICIARY OF A PREPAID LIFE INSURANCE POLICY. 2 YEARS LATER TO POLICY OWNER DIED AND I HAD MOVED AND FORGOT ALL ABOUT IT. HOW DO I FIND OUT IF I AM
ENTITLED TO THE PAYOUT OF THE POLICY AFTER ALL THESE YEARS? WE BOTH LIVED IN COLORADO AT THAT TIME.
Buying life insurance
WHAT FACTORS ARE CONSIDERED IN INDIVIDUAL LIFE INSURANCE UNDERWRITING?
CAN I BUY A POLICY ON SOMEONE ELSE'S LIFE? WHAT IS AN "INSURABLE INTEREST"?
WHAT IS AN "INSURABLE INTEREST"?
Cancellation
CAN AN INSURANCE COMPANY CANCEL MY POLICY FOR ANY REASON IT CHOOSES?
CAN I CANCEL MY POLICY AT ANY TIME AND WILL THERE BE A PENALTY?
Eligibility
CAN I BUY A POLICY ON SOMEONE ELSE'S LIFE? WHAT IS AN "INSURABLE INTEREST"?
WHAT IS AN "INSURABLE INTEREST"?
WHAT FACTORS ARE CONSIDERED IN INDIVIDUAL LIFE INSURANCE UNDERWRITING?
CAN AN INSURANCE COMPANY REFUSE TO SELL ME INSURANCE FOR ANY REASON IT CHOOSES?
I WAS DENIED LIFE INSURANCE RECENTLY BECAUSE, AS A MINOR, I HAD BEEN COMMITTED FOR ATTEMPTED SUICIDE. THAT INCIDENT OCCURRED A NUMBER OF YEARS EARLIER. CAN THE COMPANY ME
AFTER A LAPSE OF SO MANY YEARS AND USE MENTAL HEALTH AS A REASON TO DENY MY APPLICATION?
Exclusions and limitations
WHAT ARE "EXCLUSIONS" AND "LIMITATIONS" AND HOW DO THEY AFFECT MY LIFE INSURANCE COVERAGE?
Death claims
WHAT HAPPENS IF THE INSURED PERSON DIES?
WHAT AM I REQUIRED TO DO WHEN I HAVE A CLAIM?
DO I NEED A LAWYER TO HELP ME FILE A DEATH CLAIM?
CAN A LIFE INSURANCE COMPANY DENY A CLAIM ON A VALID POLICY IF THE INSURED DIES?
Government regulation
WHY ARE LIFE INSURANCE COMPANIES REGULATED BY THE GOVERNMENT?
WHO REGULATES THEM?
Physical examination
IS A PHYSICAL EXAM NEEDED?
Rates
ARE THERE ANY LIMITATIONS ON WHAT AN INSURANCE COMPANY CAN CHARGE FOR INSURANCE?
Types of life insurance
WHAT IS INDIVIDUAL LIFE INSURANCE?
WHAT IS GROUP LIFE INSURANCE?
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Results from search: http://www.aidsinfonet.org/104-viaticals.html
Selling Your Life Insurance
New Mexico AIDS InfoNet
Fact Sheet Number 104
SELLING YOUR LIFE INSURANCE
WHY DO PEOPLE SELL THEIR LIFE INSURANCE
POLICIES?
WHO BUYS LIFE INSURANCE POLICIES?
HOW CAN I SELL MY LIFE INSURANCE POLICY?
WHAT ARE THE CRITERIA FOR BUYING A
POLICY?
HOW MUCH WILL I GET?
WHAT ARE MY OPTIONS?
PRO . . .
. . . AND CON
HOW DO I CHOOSE A COMPANY TO BUY MY
POLICY?
THE BOTTOM LINE
Print
this Fact Sheet on a single page using:
Microsoft Word
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& Printing Fact Sheets
WHY DO PEOPLE
SELL THEIR LIFE INSURANCE POLICIES?
Many people with life-threatening illnesses decide to sell their
life insurance policies to provide extra cash for various expenses.
Life insurance is usually a way to provide cash to your survivors.
There may be other ways to supplement your own resources and still
provide for the beneficiaries of your life insurance policy.
WHO BUYS LIFE
INSURANCE POLICIES?
Investors buy life insurance policies from people who are not
expected to live very long. The investors buy the policy at a
discounted rate. When the person who sold the policy dies, the
investor receives the full amount of benefits from the insurance
company.
HOW CAN I SELL
MY LIFE INSURANCE POLICY?
Selling a life insurance policy is called "viatication".
If you want to sell a life insurance policy, you can sell it directly
to a viatical investment company, or you can deal with a broker.
A viatical investment company finds investors who want
to buy life insurance policies, and it finds people who want to
sell policies. The company pays the person selling their policy,
and when the person dies, the company receives the life insurance
benefits and pays the investors.
A broker normally takes applications from people who
want to sell their policies, and presents the information to several
different viatical companies. Brokers will try to find the highest
price available for someone's life insurance policy. The more
companies a broker deals with, the better. Your policy should
be reviewed by at least 3 companies.
WHAT ARE THE CRITERIA
FOR BUYING A POLICY?
Each company sets its own guidelines for deciding how much it
will pay for a policy, and whether there are any other conditions
that must be met. Normally, to sell a policy, you will need to
meet several conditions:
Have owned the policy for at least two years with no pre-existing
HIV conditions noted.
Have permission from the owners or beneficiaries of the policy.
You may need your employer's permission to sell a group policy
you got as an employee.
Have a terminal illness. Usually, a doctor needs to say that
you have a limited life expectancy. The more medical problems
you document, the higher the bid you may get for your policy.
If you have a high T-cell count, viatication may not be a good
option.
Viatical companies may have other rules about the types of
policies they will buy, or the insurance companies they will consider.
The companies normally will review your medical records and decide
how much they would be willing to pay. The whole process usually
takes about 6 weeks to 3 months.
HOW MUCH WILL
I GET?
The amount you will receive for your policy depends mostly on
how much longer you are expected to live. The sooner the investors
will receive the life insurance benefits, the more they are willing
to pay.
Most viatical companies say that they can pay between 50% and
85% of a policy's face value. Since more potent antiviral medications
were introduced, offers have fallen to a range of 25% to 55%.
WHAT ARE MY OPTIONS?
The viatical industry is new, and was started because people with
AIDS were becoming bankrupt due to their medical expenses. However,
you may not have to sell your life insurance to get money from
it. Check with your insurance agent to see if you can:
borrow against your insurance policy, sometimes at
a very low interest rate;
cash out the policy. See if it has a "surrender
value".
use "accelerated benefits" , or "living
benefits" to pay you while you're still living.
PRO . . .
On the plus side, you might want to sell your life insurance policy
because:
You will receive a lump sum cash payment for your policy.
You can do whatever you want with the money.
You won't have to pay any more life insurance premiums.
You might receive more than the current cash value of the
policy.
You don't have to pay the money back, like you would if you
borrow against your life insurance policy.
In some cases, the money you receive is tax-free.
. . . AND CON
Selling your life insurance policy can have some disadvantages,
including:
You might lose your eligibility for some public assistance
benefits. This would most likely happen for benefits that are
based on your income and assets, such as food stamps, Medicaid,
welfare, and some Social Security benefits.
Your life insurance benefits won't be available when you
die. If you wanted money to go to certain people or organizations,
you would have to make those gifts from the money you get for
selling your policy.
People might learn about your health status during the process
of selling your policy.
HOW DO I CHOOSE
A COMPANY TO BUY MY POLICY?
Check with the state insurance department to see if viatical companies
are licensed. Be sure to get offers from several companies.
An organization that represents viatical companies is the Viatical
and Life Settlement Association of America, Washington, DC, (202)
429-5129; http://www.viatical.org
An Internet web site with independent information is Viatical
Settlements Information at http://www.viatical-expert.net/
THE BOTTOM LINE
If you have a life insurance policy, you may be able to sell it
and use the money however you want to. There are many companies
that buy life insurance policies. Each company will have its own
procedures and will come up with its own offer for your policy.
Shop around for the best offer.
Selling your life insurance might affect your income taxes
or financial benefits that you currently receive. Be sure to get
good advice before selling your policy.
Revised December 1, 2001
Go
to InfoNet Main Page
Go to
Index of Fact Sheets
Click
here if you have questions
The New Mexico AIDS InfoNet is a project of the
New Mexico AIDS Education and Training Center
Partially funded by the National Library of Medicine
and the New Mexico Department of Health
Results from search: http://www.nvrnvr.com/toc.html
Viatical Table of Contents
Table
of Contents
Please click on your selection to get the answers you need.
Return to NVR Home Page
Acknowledgments
About NVR
About the Author
Introduction and Definitions
What is a "sale" of a life insurance policy?
Who can make a sale?
What do the terms "Viatical Settlement", "Viator" and "Viate"
mean?
What is the difference between "group" and "individual"
life insurance, and between "permanent" and "term"?
What is a "contestable clause"?
What is a "suicide exclusion"?
What is a "Waiver of Premium for Disability"?
What is an "accelerated Death Benefit"?
What is the difference between "funded" and "non-funded"
viatical settlement purchasing companies?
IF THE INSURED HAS A LIFE-CHALLENGING CONDITION
What alternatives should I explore before selling my life insurance?
Am I maximizing my resources?
Do I have any other assets from which I could get money?
Do I really want to use my life insurance now?
Can I borrow money against my policy?
Does my policy have an "Accelerated" Benefit?
Can I get a friendly loan?
Can I get a commercial loan from a bank or some other companyusing my life
insurance policy as collateral for the loan?
What about a Viatical Settlement?
What if all else fails?
Before I even begin the process, how do I assure confidentiality?
Do I qualify for a sale?
A SALE BASED ON AGE
What alternatives should I explore before selling my life insurance?
Does my age qualify me for a sale?
GENERAL CONSIDERATIONS
Salability of Life Insurance Policy
Does my life insurance policy qualify for sale?
Are there provisions in my policy or elsewhere that could prevent a sale?
What are the consequences of a sale?
What are the income tax consequences of selling my policy?
What other tax consequences of selling my policy should I consider?
Does selling my policy afect other insurance benefits, such as disability
or health?
Will selling my policy affect Federal or State assistance programs such as
Social Security, food stamps, Medicaid, unemployment benefits or veterans'
disability pension benefits?
What other questions should I ask before selling a policy?
What if I outlive the period of time estimated by the purchaser or the
insurance company becomes bankrupt?
Are the proceeds of a sale subject to the claims of my creditors?
Are there any restrictions on how I can spend the money I receive?
After a sale, do I continue to pay the premiums? Do I have any other
obligations? Do I have any rights?
WHAT ABOUT THE SALE PROCESS?
How much money can I expect to receive on a sale?
What if I have a statistical life expectancy of 24 months or less?
What if I have a statistical life expectancy of more than 24 months?
What can I expect to receive from my policy if I sell it because of my age?
If my policy has a "cash value" provision, how does that affect a
sale?
Selling part of a policy
Do I have to sell all of my policy or can I sell part of it?
If I only want to sell part of my policy, how should I do it?
The sale process
Do I have to submit to a medical exam in order to sell my policy?
Will anyone contact the beneficiary of my policy?
Do I need anyone's consent to a sale?
Do I have to accept an offer? If I accept an offer, can I change my mind?
What if a purchaser pressures me to accept an offer?
Will a Viatical Settlement Purchasing Company pay anyone I designate? If
so, how?
If I apply today to sell my policy, when can I expect to receive my money?
Why does the typical application ask:
whether my beneficiary is a minor?
for the right to do credit checks?
for the right to contact my employer?
for a drivers license or other photo identification?
whether I'm divorced?
What happens after I complete an application and the authorization forms?
What happens after I sign the contract?
How do purchasing companies determine when to claim the proceeds of the
policy?
What if I sold a policy and want to sell another one?
WHAT IS THE BEST WAY TO SELL MY POLICY? TO
CHOOSE THE RIGHT VIATICAL SETTLEMENT COMPANY FOR ME?
What is the best way to sell my policy?
How can I choose the right Viatical Settlement Company for me?
WHAT ABOUT GOVERNMENT REGULATIONS?
What about State Viatical Settlement Laws?
Are there Federal Viatical Settlement Laws?
Do the Federal or State Securities laws apply to the sale by a viator of a
life insurance policy
How can I be certain the company that I'm dealing with is legally
authorized to "broker" or purchase my policy?
What if I reside in a State that does not have a Viatical Settlement law?
WHAT ARE SOME OF THE OTHER THINGS I SHOULD THINK
ABOUT?
What should I consider before applying for a Waiver of Premium due to my
condition?
Is there anyone I should consult before selling my policy?
Does using a broker cost me money?
Why do companies include overnight envelopes when they send out
applications?
I've seen ads saying "no sales charge" and "no load."
What does that mean?
Do you have any tips on how to invest the funds I receive from a sale
before I use them?
Can a person who has been diagnosed with a life-challenging condition
obtain more life insurance?
While I'm tending to these matters, what else should I be thinking about?
If I have more questions, how can I find the answers?
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Frequently
Asked Viatical Questions
What is a Viatical Settlement?
Why choose to viaticate (sell) a life
insurance policy?
Do I need to be terminally ill to sell
my life insurance?
What type of life insurance policy can I
sell?
Is there a limit to the size of the
policy I can sell?
Do I have to sell my entire policy?
How much should I expect to receive?
Does an insured have benefits available
from his/her own insurance company?
Q: What is a
Viatical Settlement?
A: A Viatical
Settlement is simply the sale of a life insurance policy to a third party in exchange for
an immediate lump sum cash payment.
The purchaser of the policy receives all rights to and proceeds from
the policy while taking over the premium payments. In return, the seller (insured)
receives a percentage of the face value of the policy in cash, which he/she may use in
absolutely any way.
Top
Q: Why choose to
viaticate (sell) a life insurance policy?
A: For those
facing life threatening illnesses , disease forces undue financial burdens on
the victim and his/her loved ones by depriving a person of the ability to work and rapidly
exhausting any savings. When this happens, a viatical settlement allows a viator (seller)
to:
continue his/her health care;
improve quality of life;
retain/regain financial security; and
live the remainder of his/her life with dignity.
For seniors , the following
situations are the most common:
1. Selling your business
The policy you purchased to finance a buy/sell
agreement is no longer needed after the business has been sold to a third party.
You or your business owns a key -man policy that,
because of a change in ownership, is no longer necessary.
2. Charitable Organizations
A not-for-profit organization can sell a gifted policy to
supplement its current cash flow.
3. Re-examining Corporate-Owned Life Insurance (COLI)
Your business owns a key-man policy on an executive who is
no longer employed there.
A recent change in tax law has made some leveraged COLI
programs uneconomical.
Your company owns policies purchased to fund deferred
compensation or retiree benefit programs, after such programs have been changed.
4. Addressing Changes in Your Estate Planning Needs
Your estate size has been decreased or the tax policy
has changed, reducing the insurance required to pay projected estate taxes.
You have had a change in financial condition, and the
premiums on your policy are no longer affordable.
You outlive your family or beneficiaries.
Top
Q: Do I need to be
terminally ill to sell my life insurance?
A: NO. Life
insurance policies from older individuals with a normal life expectancy are commonly
purchased.
Top
Q: What type of life
insurance policy can I sell?
A: Virtually any
type of policy from any carrier, including individual term, whole and universal life,
group, as well as corporate-owned policies and policies held in irrevocable life insurance
trusts. In some circumstances, even contestable life insurance policies can be
purchased.
Top
Q: Is there a limit to
the size of the policy I can sell?
A: No. Absolutely
any size policy can be purchased, there are no limitations.
Top
Q: Do I have to sell my
entire policy?
A: No. Any
portion of a policy can be sold with the remaining death benefit being kept in the name of
the original beneficiary.
Top
Q: How much
should I expect to receive?
A:
In general, most cases settle for 50 - 85% of the face value of the
policy. However, for applicants with life expectancies beyond 5 years, offers
between 25 - 50% are common.
Top
Q: Does an insured
have benefits available from his/her own insurance company?
A: In some cases the
insurance company may offer accelerated benefits or have a living benefit rider. If the
insured qualifies, the insurance company will pay a certain percentage of the total
benefit if the viator meets certain requirements. Examples of such requirements might be
6-12 months life expectancy (12 months is high with most insurance companies), home health
care or nursing home care, and total disability. In most cases the amount offered by the
insurer is significantly lower than the offers from viatical settlement companies and is
not available until the policyholder is considerably closer to death. Insurers will
usually only offer to accelerate a portion of the policy, the remainder of which, less
interest and fees, is paid to the original beneficiaries at the time of the insured's
death. It is a good idea to compare a viatical settlement offer with what your insurance
company has to offer, to determine which route is best for each individual.
Top
What's Your Next Step?
Find out the qualification requirements for viatical and senior
settlements .
Review the step by step life
insurance settlement process .
Read the most frequently
asked questions .
Learn more about the tax
implications of a life insurance settlement .
Request
more information or visit our Download
Center !
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Financial Services Guide ( Viatical Settlements )
Viatical Settlements Viatical Settlements
Viatical Settlements,
Viatical Settlements
------
WHY DO PEOPLE SELL THEIR LIFE INSURANCE
POLICIES?
Many people with life-threatening illnesses do not have enough money to pay for their
medical expenses. Sometimes they have to choose between buying medicine and paying their
rent. However, if you have a life insurance policy, you may be able to sell it. This means
that you would get money to help pay for your medical and living expenses.
WHO BUYS LIFE INSURANCE POLICIES?
Investors buy life insurance policies from people who are not expected to live very long.
The investors buy the policy at a discounted rate. When the person who sold the policy
dies, the investor receives the full amount of benefits from the insurance company.
HOW CAN I SELL MY LIFE INSURANCE POLICY?
Selling a life insurance policy is called "viatication". If you want to sell a
life insurance policy, you can sell it directly to a viatical company, or you can deal
with a broker. Condor International Financial Services is happy to broker this viatical
for you so you will not have to shop around to find the best possible price for your
policy. A viatical company finds investors who want to buy life insurance policies,
and it finds people who want to sell policies. The company pays the person selling their
policy, and when the person dies, the company receives the life insurance benefits and
pays the investors.
We normally take applications from people who want to sell their policies, and present the
information to several different viatical companies. We WILL find
the highest price available for your life insurance policy.
WHAT ARE THE CRITERIA FOR BUYING A POLICY?
Each company sets its own guidelines for deciding how much it will pay for a policy, and
whether there are any other conditions that must be met. Normally, to sell a policy, you
will need to meet several conditions:
1. Have owned the policy for at least two years
2. Have permission from the owners or beneficiaries of the policy
3. Have a terminal illness. Usually, a doctor needs to say that you are not expected to
live more than four years.
Viatical companies may have other rules about the types of policies they will buy, or the
insurance companies they will consider. The companies normally will review your medical
records and decide how much they would be willing to pay. The whole process usually takes
about 3 weeks to 2 months or more.
HOW MUCH WILL I GET?
The amount you will receive for your life insurance policy depends mostly on how much
longer you are expected to live. The sooner the investors will receive the life insurance
benefits, the more they are willing to pay. Most viatical companies say that they
can pay between 50% and 85% of a policy's face value.
PRO . . .
On the plus side, you might want to sell your life insurance policy because:
1. You will receive a lump sum cash payment for your policy.
2. You can do whatever you want with the money.
3. You won't have to pay any more life insurance premiums.
4. You might receive more than the current cash value of the policy.
5. You don't have to pay the money back, like you would if you borrow against your life
insurance policy..
6. In some cases, the money you receive is tax-free.
. . AND CON
Selling your life insurance policy can have some disadvantages, including:
1. You might lose your eligibility for some public assistance benefits. This would most
likely happen for benefits that are based on your income and assets, such as food
stamps, Medicaid, welfare, and some Social Security benefits.
2.Your life insurance benefits won't be available when you die. If you wanted money to go
to certain people or organizations, you would have to make those gifts from the
money you get for selling your policy.
3.People might learn about your health status during the process of selling your policy.
HOW DO I CHOOSE A COMPANY TO BUY MY POLICY?
Condor International Financial Services will be happy to find the best company to purchase
your policy.
THE BOTTOM LINE
If you have a life insurance policy, you may be able to sell it and use the money however
you want to. There are many companies that buy life insurance policies. Each company will
have its own procedures and will come up with its own offer for your policy. We will shop
around for the best offer.
Selling your life insurance might affect your income taxes or financial benefits that you
currently receive. Be sure to get good advice before selling your policy.
.
Viatical Settlements Viatical Settlements Viatical
Settlements, Viatical Settlements, viatical settlements, viatical settlements
© Copyright Condor International Financial
Services
Results from search: http://www.state.ct.us/cid/lfefraud.htm
Selling Your Life Insurance Policy - CT Insurance Department
Connecticut
Insurance Department
Life Insurance Fraud
Selling Your Life Insurance Policy:
What you should know about Life and Viatical Settlements
Selling your life insurance policy is a major financial decision. If you're
considering selling your policy you should carefully evaluate the benefits involved and
the alternative options available. People have been drawn into committing
insurance fraud under the pretext of applying for and then immediately selling insurance
policies. If you've been contacted to buy a policy and then sell it
immediately, you should contact the Connecticut Insurance Department. It's possible
you're being targeted to participate in insurance fraud.
The Connecticut Insurance Department, along with the National Association of
Insurance Commissioners, is concerned that consumers may not fully understand the
implications of selling their policies. The following information is provided as general
information. Consumers are urged to contact the Connecticut Insurance Department for more
specific information.
The two main categories of insurance policy sales are life settlements and viatical
settlements. A life settlement differs from a viatical settlement because the
insured in a life settlement is usually healthy, while a viatical settlement pertains to a
sale by an insured with a terminal illness.
Life Settlements
A life settlement is the sale of a life insurance policy to a third party. The
owner of the life insurance policy gets cash for the policy. The buyer becomes the new
owner and/or beneficiary of the life insurance policy, pays all future premiums and
collects the entire death benefit when the insured dies. Healthy people decide to sell
their life insurance policies for many reasons. Some of the most common being: changes in
the financial needs of dependents, a desire to eliminate or reduce premium payments, or
the need for cash to meet expenses. Policies may be sold directly to a company or through
a broker who works for you and "comparison shops" for life or viatical
settlement offers. The buyer pays the broker a commission if the sale is completed.
Viatical Settlements
People living with a terminal illness often face very tough financial choices.
Selling an insurance policy through a viatical settlement is one option that may be used
to provide cash to help with current medical and living expenses. Like life settlements,
viatical settlements involve the sale of a life insurance policy to a third party. In
exchange for a discounted cash payment to the seller, i.e., a reduced percentage of the
death benefit, the buyer becomes the new owner and/or beneficiary of the life insurance
policy, pays all future premiums and collects the entire death benefit when the insured
dies.
Options Other Than Selling Your Life Insurance
Two options you should always consider before selling your policy are using any policy
cash value and exercising an accelerated death benefits provision (ADB). If
your policy is a whole life policy, or a policy with an investment feature, you may be
able to obtain a loan against its cash value to meet your immediate needs and keep your
policy in force for your beneficiaries. You may also be able to use the cash value as
security for a loan from a financial institution. If your policy has an accelerated death
benefit provision, it could pay you a substantial portion of your policy's death
benefit and you would avoid the need to sell the policy.
Connecticut Consumer Protections
Connecticut has acted to regulate viatical settlements under Connecticut General
Statutes, Section 38a-465, et.seq. Viatical settlement companies and brokers must be
licensed and the Insurance Commissioner must approve the contracts and forms used.
Additionally, the seller of a life insurance policy has specific rights including,
disclosure in writing of certain information prior to execution of the sale,
confidentiality of personal information provided to buyers and the right to rescind the
sale within 15 days from the receipt of the settlement proceeds.
Some Important Questions to Ask Prior to Selling Your Life Insurance Policy
Do I still need life insurance protection?
Will I qualify for a new life insurance policy in the future?
If I sell my policy, how will they decide how much cash I receive?
If my policy is group coverage, do I need my employer's permission to sell the
policy?
If I sell my policy, who will be the legal owner?
Can the policy be resold?
What information will the purchasers or investors receive about my family, my health
status or me?
Are the broker and company I am speaking with licensed in Connecticut?
Some Important Considerations to Understand Before Selling Your Policy
The proceeds from the sale may not be not tax free. Contact a tax advisor and find out
the tax implications.
Be aware that your creditors may be able to claim the proceeds of the sale.
Determine if you stand to lose public assistance or Medicaid if you receive a cash
settlement.
Understand clearly that you will be required to provide medical and personal information
to the purchasers of your policy.
Consumer Tips
Understand the process involved in the sale and the phases involved.
Decide whether to sell your policy directly to a company or to use a broker to do
comparison shopping for you.
If you do not use a broker, comparison shop yourself. Remember you do not have to accept
any offer.
Check all the application forms for accuracy, especially the information concerning your
health history and status.
You must be truthful in all your answers to application questions.
Be sure the life or viatical settlement buyer places your settlement proceeds in escrow
with an independent bank to ensure the safety of the funds during the policy transfer.
Understand that Connecticut law gives you the right to undo the sale within 15 days from
your receipt of the proceeds, if you change your mind and return the proceeds and any
premiums paid by the buyer.
Be aware of the personal information you must provide and what parties will have access
to it after the sale.
This information is provided in cooperation with the:
National Association of Insurance Commissioners
120 W. 12 th Street, Suite 1100
Kansas City Mo. 64105
(816) 842-3600
http://www.naic.org
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