What are Life Settlements?
Am I eligible?
What Options Do I Have?
Is It Right For Me?
Why Should I Consider It?
How Much Can I Make?
Are There Tax Issues?
What Is The Process?
What Should I Prepare?
What Should I Look For?
How Do I Start?
Where Can I Learn More?
Your Life Settlement Questions. Answered.
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Examples of how a Life Settlement can help you
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Thursday February 28, 2008 12:00AM | Click here to visit original article.
There are alternatives to selling your life insurance policy to a third party. If you need money now but you still want to maintain your current policy, there are alternatives. These include:
- Borrowing against your policy – some insurance policies will allow you to borrow against your policy, though this will decrease the death benefit if you pass away before the policy is repaid.
- Accelerated death benefits – also called viaticals, this allows the policyholder to receive either a lump sum or periodic payments on the policy while still alive if they are considered terminally ill, or have a long-term or catastrophic illness. Check with your policy to see what is allowed.
- Personal loan – consider borrowing money from other sources such as a personal bank loan, a loan from your 401k, a line of credit on your house, or from a friend or family member.
- Selling part of your policy – some insurance policies will allow you to sell a portion of your policy to help lower your premiums. Check with your insurer about this possible option.
- 1035 exchanges – the IRS allows you to exchange your life insurance policy for a new one without paying taxes on any investment gains earned on the original policy. An excellent detailed discussion on this is provided by FINRA (Financial Industry Regulatory Authority). This can be found by clicking here.
Although I have listed alternatives for you to consider, selling to a life settlement may still be your best option depending on your specific circumstances. Please discuss the option of selling your life insurance policy with your tax advisor, financial planner, and insurance agent along with your spouse and dependents.
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56 Year Old Male
$1,500,000 Convertible Term Life
$0 Surrender Value
Paid: $360,000
73 Year Old Male
$1,000,000 Universal Life
$3,500 Surrender Value
Paid: $52,183
71 Year Old Female
$500,000 Universal Life
$3,500 Surrender Value
Paid: $50,000
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