Ispa Insurance: Do They Offer Life Insurance Policies?

Life insurance is a financial safety net that protects your beneficiaries from financial struggles in the event of your passing. However, you may find that your plan no longer suits you, and you may want to sell your life insurance policy. This is known as a life settlement, and it's a great way to get money for your unwanted policy. In this paragraph, we will explore the topic of selling life insurance policies, including the advantages and disadvantages, the process of selling, and the eligibility requirements. We will also discuss the role of life settlement brokers and providers, and provide tips for getting the best deal.

Life insurance policy owners can sell their policy for cash

The process of obtaining a life settlement involves selling a life insurance policy to a third-party buyer for a cash payout that is more than the policy's cash surrender value but less than the total face value of the policy.

There are two main ways of selling your life insurance policy: life settlements and viatical settlements. A viatical settlement is for life insurance policyholders who have a life-threatening illness, reduced life expectancy, or chronic health issues.

To sell your life insurance policy, you can follow these steps:

• Find an experienced life settlement provider.
• Meet the qualifying factors, such as owning a policy with a death benefit of $100,000 or more and being over the age of 60.
• Take a detailed health questionnaire.
• Provide authorization for the provider to access medical records and contact the insurance company.
• Share policy details with the life settlement provider.
• Wait for the underwriting process to be completed.
• Review the offer and explain next steps.
• Complete the closing process, including transferring ownership of the policy and documentation.

The amount of cash you may be offered for your policy can vary based on its specifics, such as the premiums, death benefit, and your age and health status. It's important to note that selling your life insurance policy may have tax implications and affect your eligibility for certain financial assistance programs.

Before selling your life insurance policy, consider alternatives such as surrendering the policy for its cash value, borrowing against the policy, or adjusting the coverage amount.

The process of selling a life insurance policy is known as a life settlement

There are two main ways of selling your life insurance policy: life settlements and viatical settlements. A viatical settlement is for those with a terminal illness who expect to live for less than two years.

Application

You will need to complete an application for each life insurance settlement from which you solicit offers. As part of the application process, you must grant the settlement company permission to obtain information about your policy and health. You may also be asked to provide additional information or documentation.

Documentation

Once you have submitted your application and granted the necessary permissions, the settlement company underwriters will begin gathering information. They will contact your life insurance provider to request details about your policy, including its death benefit and premiums. The underwriters will also request a copy of your medical records from your healthcare providers.

Appraisal

After reviewing the relevant information, underwriters will determine the market value of your life insurance policy. They will consider the policy's value and the opinion of medical experts regarding your health. They will also look for signs of fraud.

Offer

If your policy is deemed suitable for purchase, the settlement company will extend an offer. You can either accept or decline the offer. It is recommended that you compare offers from multiple companies before making a final decision. If you hired a broker, you may be able to negotiate.

Closing

If you accept the offer, the settlement provider will send a closing package for you to review and sign. Once you return the signed documents, your insurance provider will be notified of the transaction. Ownership of the policy will change, and you will receive the settlement funds.

The process of selling a life insurance policy typically takes between 60 and 120 days. It is important to note that selling a life insurance policy requires the cooperation of both the policy owner and the insured person.

Life settlement companies buy life insurance policies from policyholders

Life settlement companies provide an alternative to cashing out your policy. They buy active life insurance policies from older adults, offering cash settlements to secure the death benefit rights to the policies. The companies then become the beneficiaries of the purchased life insurance policies and are responsible for paying the premiums.

There are two main types of companies that purchase life insurance policies: life settlement companies and viatical settlement companies.

Life Settlement Companies

Life settlement companies specialize in senior life settlements. They purchase policies primarily from seniors who no longer need their life insurance. They specialize in valuing and buying these policies, often offering more than the cash surrender value but less than the death benefit.

Viatical Settlement Companies

Viatical settlement companies are for individuals living with a life-threatening illness. They involve selling your life insurance policy to a company for an immediate cash payout. They are often chosen by those seeking financial support for medical expenses or living expenses.

Choosing the Right Company for Selling Your Life Insurance Policy

When choosing a company to sell your life insurance policy to, it is important to consider your individual circumstances and eligibility criteria for each type of settlement. Life settlements are for healthy seniors aged 75 or older, while viatical settlements are designed for those facing life-threatening illnesses.

Life insurance policies can be sold to life settlement providers directly or via a life settlement broker

Life Settlement Providers

Life settlement companies, such as Coventry or Abacus Life Settlements, buy life insurance policies from policyholders on behalf of investors and financial institutions. When you sell your policy, the life settlement company pays you a portion of your policy's value. They then take over paying your premiums and receive the death benefit when you die.

Life Settlement Brokers

Most life settlements are handled through brokers. A life settlement broker facilitates the sale of your life insurance policy to potential buyers, including life settlement providers. They assist in navigating the life settlement process and connecting you with the best offers. However, they also take a substantial fee directly from your settlement amount for their services.

Pros and Cons of Using a Broker

Using a broker can save you time and effort as they will do the work of gathering offers from different life settlement providers. They can also help you to negotiate a better deal. However, you will have to pay them a fee or commission, which can be as high as 50% of the price a policy sells for.

Life settlement brokers gather offers from different life settlement providers

Life settlement brokers are licensed professionals who represent the seller of a life insurance policy in a life settlement transaction. They are similar to real estate agents but instead of selling homes, they help sell life insurance policies for the highest possible amount.

Life settlement brokers create a competitive bidding environment by presenting the policy to multiple buyers in an auction format. This drives up the final sale value, resulting in more money for the policyholder. They manage the bidding rounds manually, documenting the bids and keeping the bidders apprised of how competitive their offers are.

The broker's commission is a set percentage based on the sale price, which encourages them to sell it for the highest value and means the policyholder won't pay anything out of pocket.

The process of selling a life insurance policy through a life settlement broker involves the following steps:

• Pre-qualify the applicant for life settlement viability: The broker collects basic information to determine if the policy is sellable, including the policyholder's age, a general description of their health, and details of the policy itself.
• Gather the necessary submission requirements: The broker assembles a document package, including the policyholder's basic information, insurance coverage information, and medical history.
• Submit to licensed providers: The broker markets the policy to licensed life settlement providers, who review the documentation and submit their offers.
• Manage the auction process: The broker facilitates the auction process, documenting the bids and encouraging incremental increases in each round.
• Sale closure: Once the winning bid is accepted, the broker assembles a closing package, which may include a letter of competency, verification of coverage, signed offer sheet, life settlement contract, life expectancy reports, and change of ownership and beneficiary forms. The insurance company verifies the updates to the policy and the funds, less any fees and commissions, are released to the policyholder.

Life settlement brokers can simplify the process of selling a life insurance policy and help policyholders get the highest value for their policies.

Frequently asked questions