Life Settlement Brokers Secure Higher Offers For Policyholders, Even After The Broker’s Commission.
For many, selling a life insurance policy is an entirely new concept that many find difficult to understand. In the United States, most policyholders are unaware of the life settlement option entirely. As a result, over $100 billion in term policies, whole life policies, and universal life policies lapse annually. Based on 2008 data compiled by publicly available sources, more than 250,000 universal and variable universal policies with a face value of approximately $57 billion were lapsed by seniors over age 65. When term and whole life policies are included, the number of policies exceeds 1.1 million with a face value of $112 billion.
Check out this taxation guide for more information on life settlement taxes. By all means, we aren’t tax experts but we can help clarify the details around life settlement taxation. For your specific policy and situation, talk to a tax professional. Every policy is different, and therefore will be taxed differently.
Life insurance settlements have been around for over 100 years. The industry dates back to a Supreme Court case in the early 1900s. “Grigsby v. Russell” and others confirm that a life insurance policy is an asset, just like a house or car. Basically, you as the policy owner have a right to sell that asset at any time.
This particular case is a landmark U.S. Supreme Court case because it validated the marketplace.
As mentioned, life insurance companies want policies to lapse. They don’t want you to sell your policy to a third party. Doing so keeps them responsible for paying the death benefit. For this reason, life insurance companies haven’t always been transparent with policyholders. In particular about all the options available for their policy.
Policyholders sued Lincoln National Life Insurance for “shock lapses” and lack of disclosure. Shock lapses refer to Lincoln National increasing their customer’s premiums for the same level of coverage. This inevitably caused a large number of policyholders to suddenly cancel or lapse their policies at once.
Just a little push in that direction and the insurance company got exactly what they wanted. They didn’t disclose the financial option of life settlements to the policyholders. Besides, it’s easy to let the policy go when you don’t realize how much money you can get from it.
Since these complaints, some states have started implementing disclosure requirements. Thus making it mandatory for insurance companies to provide all available options to policy owners. In particular policyholders considering lapsing a policy.
At Windsor, we typically complete the life settlement process in 60-90 days, although very simple cases can be expedited. We’re happy to work with you on your liquidation goals. We’ll give you honest, clear responses so that you can manage your timeline. As well as plan for your immediate future.
Our goal is to get you the maximum value for your life insurance policy. Sometimes the best option is not a life settlement. For example, many clients have riders in their policy like an “Accelerated Death Benefit” that can be a better option. Our knowledge of the market and our relationships with investment groups make for a quick and thorough evaluation of your policy.
Transparency is important in all financial matters. Brokers will keep you up-to-date on all the details of the sale and transfer of your policy. You can also rest assured that we will follow industry best practices. Thus keeping your private financial and medical information secure.
You’re invited to join the weekly newsletter for policyholders considering a life settlement.