What is a life settlement?
A life settlement is a transaction in which a life insurance policy is transferred between parties. Life insurance policies have value, and can be sold for money. The purchaser agrees to pay a certain fee to the policyholder in exchange for the benefits of the policy. The purchaser also takes on responsibility for paying any future premiums the policy may require. Then, when the insured passes away, the purchaser can collect the policy’s benefits.
What is a Viatical Settlement?
A viatical settlement is a transaction in which a person with a terminal illness, such as cancer or ALS, sells their life insurance policy to a third party in order to benefit from the proceeds while alive. The proceeds can be used to pay for alternative medical treatment or for any other purpose.
What is a life or viatical settlement broker?
A life or viatical settlement broker is someone who is specially licensed and trained to underwrite, evaluate, and sell a life insurance policy on the secondary life insurance policy market.
Why would someone sell their life insurance policy?
A life or viatical settlement is a quick way to convert a life insurance policy into cash. Many people whose life insurance policies are no longer affordable will seek a life or viatical settlement to get up front value for their policy. Others see it as an investing decision. It may be more worthwhile to sell the policy now than to wait for it to mature, given the potentially fluctuating value of the policy.
Are there any tax or financial implications that I need to consider?
We recommend that anyone who is considering a life settlement should discuss the topic with his or her insurance, tax, legal, and financial advisors.
How long does the life or viatical settlement process take?
The typical life settlement process will take 30-120 days, but that number will vary based on the complexity of the particular case. If the policyholder is diligent about getting all of the required documents and medical record releases signed, the transaction can be completed in 30 days or sooner.
What are the application fees or other fees?
There are no application fees or any other hidden fees. Hidden Gem Life Solutions only receives a commission if the policy gets sold.
Will my information be kept confidential?
Yes. Hidden Gem Life Solutions is dedicated to keeping your information safe and private. We will not share any of your personal information without first getting your written permission
What is a Convertible Term Policy?
A convertible policy is a Term Policy which can be converted into a permanent policy at a later date, such as a whole life or universal life. Regardless of any new medical conditions, the insured is not required to undergo any new or additional medical underwriting at the time the policy is converted.
Does a Term Life Insurance Policy have Cash Value?
A Term Life insurance policy does not accumulate cash value. Term life insurance is the most popular and basic form of life insurance. It is purchased in order to provide protection for a set period of time. With a Term Life Insurance Policy, you pay a fixed premium and the life insurance company will pay out the death benefit to your beneficiaries in the event of a maturity.
Why convert my Term Life Insurance Policy to a Permanent Policy?
The benefits of converting your term life insurance policy to a permanent life insurance policy, such as a whole or universal life, is that it provides your loved ones with protection throughout your lifetime. A permanent life insurance plan builds cash value, which can be withdrawn or borrowed during your lifetime. When doing this conversion, you will not need to go through a new medical underwriting process. This can be beneficial for those who may have had medical complications since initially taking out the term policy.
How much cash value is in my policy?
There is a table of cash values in your policy that will provide you with the answer. Another simple way to find out how much cash value is in your policy is to call your agent and request the cash value amount.
Who can take out a Life Insurance Policy on my life?
The only time someone can take out a life insurance policy on you, is if there is insurable interest. Someone with insurable interest includes members of your immediate family, your employer, or business partner. Before anyone takes out a life insurance policy on you, they must first get your consent.
What happens if your beneficiary passes away before you do?
If your beneficiary passes away before you do, you should name a new beneficiary on your policy. If you do not name a new beneficiary, and you pass away without having named a new beneficiary, then the death benefit will go to your estate.
What happens if there is no beneficiary on a life insurance policy?
If there is no beneficiary named on the policy, and the insured passes away, the insurance company pays the estate. After this is completed, the proceeds are distributed according to the will. If there was no will, then the proceeds are distributed out through what is called an intestate succession.
Do beneficiaries pay taxes on the money they receive from a life insurance policy?
When the beneficiary receives the death benefit, the money is not considered taxable income. Therefore, the beneficiary does not have to pay taxes on it.
There are however a few different scenarios in where the beneficiary is taxed on the policy’s proceeds.
In the instance that the benefit was not paid out right away, and the policy generated interest during this period, then the beneficiary may have to pay taxes.
One more instance may be that the death benefit is paid out to an estate. In this scenario, whoever it is that will be inheriting the estate, may have to pay estate taxes.
What happens when one fails to make the required premium payments on a life insurance policy?
If you have missed a premium payment, the standard grace period is 30 – 61 days (Grace periods do however tend to vary from state to state). If you do not pay the premium, and the grace period expires, then your policy will lapse. This means the insurance company will terminate your policy.
If you own a permanent policy, and the policy enters the grace period, you can pay the premium with your policy’s cash value (If there is enough cash value in your policy to cover the premium).
How does a life insurance beneficiary claim a policy’s death benefit?
When the insured on a policy passes away, the beneficiary or beneficiaries should get in touch with the insurance company and make them aware of a maturity on the policy. In order to claim the death benefit, you must file a death claim with the insurance company. This is done by submitting a certified copy of the death certificate, cross referencing information on the policy with the insurer to make sure you’re making a claim on the correct policy, and filling out a claim form which is also known as a “request for benefits”. After all of this is completed correctly and sent into the insurer, the insurance company will handle everything else.