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Settlements 101
There are various options available with respect to accessing cash from a current, in-force life insurance policy. In order to make an educated choice, it is necessary to investigate all options. You may do this on your own or have a qualified life insurance settlement specialist to assist you. This informative site is designed to give you the tools you need to make the right decisions given your unique situation.
History
While this site is being created, you can read a recently published, 3-part series on this industry by visiting ChicagoTribune.com Sign-up takes only a minute.
The Tribune had a team of investigative reporters do an in-depth, national study of this industry and the history of viaticals with special emphasis on the industry's past problems with regard to various types of fraud.
The entire settlement landscape had changed dramatically in the past 5-10 years, much to the benefit of all concerned.
This story illustrates why it is so very important to learn about Insurance Settlements and any company with which you consider applying, before you complete any paperwork. You can protect yourself and ensure a good settlement price by being an informed consumer. Be sure that the company(s) you choose is experienced, qualified, ethical and appropriate to assist with your needs.
The Basics
Definitions
Life Insurance Settlement - the act of assigning the rights of a life insurance policy to a third party in exchange for a lump-sum cash payment equal to less than the net death benefit of the policy. Life Insurance Settlements are further broken down as follows:
Viatical Settlement - The sale of a life insurance policy of a terminally insured in exchange for a lump-sum cash payment equal to less than the net death benefit of the policy.
Life Settlement - The sale of a life insurance policy of an insured over 65 without a terminal diagnosis in exchange for a lump-sum cash payment equal to less than the net death benefit of the policy.
Viator - this is the person, the insured, who sells the life insurance policy as a viatical.
Types of Settlement Professionals
Life Settlement Specialist - A person or company whose primary business is that of selling, brokering, purchasing, investing, underwriting or otherwise working in the life settlement industry on a daily basis.
Providers (also referred to as Funders) - These companies purchase policies as either viatical or life settlements
Settlement Providers - Institutional - These are companies that purchase policies and are funded by banks and other major financial institution.
Settlement Providers - non-institutional - these companies purchase policies with money they have obtained from individual investors. These companies may or may not have to register with the SEC, therefore the oversight also varies from State to State.
Settlement Brokers - Settlement Brokers represent the policy sellers, not the providers. The settlement broker is a responsible for underwriting the policy properly and then submitting it to multiple provider companies in an effort to obtain the highest possible settlement. Settlement brokers vary as do settlement providers.
Settlement Representatives or Agents - Settlement agents or representatives typically represent one company or at the very least owe one particular company the right of first refusal. Again, State laws vary here so you should check with your own state's Department of Insurance (link to HYPERLINK "http://www.naic.org" www.naic.org)
Other Advisors - Many times other advisors attempt to negotiate a life insurance settlement for their client. These advisors include insurance agents, financial advisors, estate planners and even attorneys. These professional advisors have all good intentions, but the unfortunate truth is that this industry has not been forthright in making available all of the facets of this industry so that these advisors truly understand it.
The unfortunate result is that many of these well-intentioned and credentialed individuals, in effect, have "Enough information to get into trouble" and certainly not enough information to properly advise you.
We will happily speak with qualified advisors to ensure that they have all of the necessary information they need to best serve their clients.
Qualifications
Health - For both viatical and life settlements, the health of the insured - specifically their life expectancy or LE, is a critical factor in computing settlement amounts. The general rule is pretty basic: The healthier you are, the less money you will get. Conversely, the shorter your life expectancy, the more money you will get for the policy.
Policy Requirements -
At a minimum, a life insurance policy must be at least two (2) years old and not subject to any contestable or suicide exclusions.
Face Value (or net death benefit): Most providers prefer life policies with a net death benefit of no less than $200,000. There are exceptions to this depending on the case.
What type of Life Insurance policy can be sold?
It should be noted that more than 90% of all policies can be viaticated or accelerated. Do not assume that your policy cannot be turned into cash - have an expert evaluate it for you!
Innovative Settlements™ will work with most type of policies, provided they are beyond the suicide and contestable periods which is typically after the first two years.
We work with term and permanent insurance, whole life, variable life, universal life, survivorship and others.
Special info for FEGLI policyholders
FEGLI - The Federal Government offers an accelerated benefit on the Basic coverage for individuals with a life expectancy of 9 months or less. With a bit of creative planning, you can also accelerate your optional coverage.
please note: if you have a FEGLI policy and you are living with a life-threatening illness, it may not be in your best interest to viaticate! There are ways to obtain up to 94% of the total face (both basic & optional coverage). This is more than any viatical company can ever pay you.
Please call us at (800) 905-0114 to speak with Carole Fiedler directly about how to accomplish this. Under no obligation, Ms. Fiedler will coach you and guide you through obtaining the highest amount without viaticating.
It should be noted that more than 90% of all policies can be viaticated or accelerated. Do not assume that your policy cannot be turned into cash - have an expert evaluate it for you!
