What happens after the life settlement transaction?
A life settlement is better than cash surrender or lapse as it pays you a lump sum amount which is actually lower than the value of your life insurance policy. However, it helps to gain more from your dead life insurance policy as it increases the liquidity and the value of a life insurance policy. If your life insurance policy is no longer required or you can not afford to pay the premiums of the policy any more than you can enter into a life settlement deal. The life settlement policy is beneficial for an individual with declining health and age above seventy as these policies have high rate of return.
Who owns the Policy?
After entering into the contact of the life settlement policy the owner of the policy is changed from the policy holder to the investor purchasing the policy. All the rights and obligations of the policy are transferred to the new owner of the policy and the owner will receive the complete death benefits of the life insurance policy after the death of the policy holder. You will receive the money after completion of the life settlement process. The value of the life insurance policy depends upon the number of factors including the age of the person, medical condition, type of the insurance policy being sold, the rating and the repute of the insurance company owing the insurance policy. The person can sell almost all kinds of life insurance policies like Universal life, whole life, Term Life, Variable life and many others.
After you have sold the insurance policy to the investor there is no restriction on you at the use of money you received from the investor. You can use this money in any respect according to your own will.
The policy holder will receive a cash sum of grater than the cash surrender value of the policy from the life settlement provider. The provider pays the remaining premiums and holds the policy as the confidential asset portfolio. Usually the life settlement providers are licensed in the respective state of the policy holder.
Does a level of cover need to be re-established
A life settlement is an alternative process for senior citizens to cover up their immediate needs. As the amount received after a life settlement is not a loan so it is unrestricted and requires no re-establishment or repayments.