Life settlement

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Viatical Settlement

A transaction in which a life insurance policy holder sells his/her policy to a third party. The situation occurs when the policy's fair market value exceeds the cash surrender value that the insurance company offers. The third party is known as a life settlement provider, who, in the United States, must abide by applicable state regulations. The life settlement provider becomes the policy's new beneficiary, is responsible for maintaining premiums, and upon the death of the insured person, receives the benefit. The secondary market for life insurance began growing in the last part of the 20th century. In a viatical settlement, the life settlement provider is speculating on how long the insured person will live; indeed, it is in the life settlement provider's financial interest for the insured person to die as soon as possible. A viatical settlement is also known as a life settlement.

Life settlement.

If you are over age 70 and no longer need your life insurance policy, you may be able to sell it to a third party in what's called a life settlement.

You're paid a cash amount less than the death benefit but typically greater than the surrender value, and the party that buys your policy will get the death benefit when you die.

Similar to viatical settlements, in which terminally ill people may sell their life insurance policies, generally to use the cash to pay for healthcare, life settlements let you forgo a death benefit and use the cash in your policy while you're alive.

However, life settlements are for people who are healthy and expect to live more than a couple of years. Specific rules for life settlements are set by the state where a specific transaction takes place.

Some businesses specialize in buying life insurance policies from older or terminally ill individuals and reselling them as investments.

However, because these insurance arrangements are controversial and most investors understand them poorly, both people considering selling policies and people considering investing in them are advised to proceed with caution. For example, there may be complex estate-planning and tax consequences to life settlements.

References in periodicals archive ?
Life settlements, also known as senior settlements, do not involve a terminal illness (less than 24-month life expectancy) but a determinable life expectancy based upon the insured's age, health and lifestyle.
Life settlements, which also are known as lifetime settlements or senior settlements, involve selling an in-force life insurance policy at a discount of the face value to a buyer interested in taking over the policy as an investment.
In recent years, the company has focused its efforts on the growing life settlement industry, sometimes referred to as senior settlements.
Today, operating from its headquarters in Atlanta, Georgia, The Lifeline Program is the preeminent life and senior settlement company in the United States.
a nationally recognized industry leader in life settlements (also known as senior settlements or lifetime settlements) has announced that the company is now offering complimentary E & O Insurance coverage to its downstream agents and brokers.
Life Partners is a licensed provider of viatical and senior settlements.
Unlike viatical settlements that are based on terminal illnesses, life settlements, which are also referred to as elder or senior settlements, involve the purchase of policies from individuals aged 65 and older who may have no serious illness.
Standard & Poor's--Viatical and senior settlement securitizations continue to attract some inquisitive investors despite the special challenges and risks those transactions pose.
is a licensed provider of viatical and senior settlements, collectively referred to as Rated Assignments for Value (RAVs).
Life Partners is a licensed provider of viatical and senior settlements, collectively referred to as Rated Assignments for Value (RAVs).
Future First Financial Group is shifting its marketing efforts from viaticals to senior settlements and has developed distribution channels specifically designed to reach this new target market.
is a leading international financial services company committed to developing prudent financial products by specializing in viatical and senior settlements.

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