Eligibility for life settlement policy
The following insurance policy holders become eligible for life settlement policy:
• All senior citizens, which are minimum 55 years of age
• Policy face amount being higher then $50,000
• Policy that has been active for at least two years and have low cash surrender value with premium rate lower then 8% annually
Life Settlements are not simple transactions and they require professional expertise to deal with them successfully. You must choose a professional settlement help to avoid overlooking in any matter. An expert professional will make a strong sale case of your life insurance policy and negotiate with the pool of investors. You have to sign authorize forms for the particular agent representing you. To determine the policy value seller must present two or more life anticipation assessment reports from nationwide documented medicinal actuarial service suppliers. The professional will present your case in front of prospective institutional buyers requesting them to put forward bids on the policy. The professional will negotiate to achieve highest bid from the top most client. A letter of intent (LOI) is signed on the behalf of policy holder which shows the acceptance of the bid. A purchase contract is forwarded to the seller for signatures. After the verification and signing of the documents policy ownership is officially changed from seller to the buyer company and escrow liberates the payment proceeds to the seller.
First example of life settlement policy
Though life settlement policy market is still in the nascent stage, earlier evidences point to the fact that the origin for this market started almost 100 years back in 1911, when the ruling was given in Grigsby vs. Russell case, that policyholder has a right to transfer his insurance policy. According to the ruling of Justice Oliver Holmes as life insurance policy has all the characteristics as that of a properly therefore it can also act like a transferable asset. This landmark judgement provided following legal rights to insurance policy:
• Policyholders can change the policy beneficiary
• Can be used as a collateral for taking loans
• Policy can be sold to another party
Another landmark in the world of life settlement was the release of Viatical Settlements Model act by National Association of Insurance Commissioners in 2001 that will help in controlling moral hazards in transactions by clearly defining guidelines for good business practices.