Life Settlements are becoming mainstream
submitted: Aug 7th 2008 |
by: BenjaminThompson |
Total views: 1 |
Word Count: 413 |
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A life settlement is an investment in your future that puts money in your hands today. There are no restrictions on how you spend your life settlement. A life settlement is not a viatical. Viaticals are purchases of policies of the terminally ill with a life expectancy of two years or less.
A life settlement is the sale of an existing life insurance policy to a life settlement provider. Life settlements are an option for policyholders who determine that their current policy is underperforming or is no longer needed due to changes in the owner's financial or other circumstances. A life settlement is NOT the same as a viatical settlement. In a viatical settlement the insured is ill and has a terminal diagnosis.
Life Settlements are senior life insurance policies that have been sold by the insured parties for cash, often to pay medical expenses or living expenses. Private investors and institutions have been investing in life settlements for about 10 years.
Life settlements are similar to viatical settlements in that a third party purchases a life insurance policy from the policyowner at a discount and holds it to maturity. However, the target market, distribution channel and motivation to sell the policy are completely different. Life settlements are a 'win-win' transaction for both the insured seller and the purchaser. Owning a life settlement is an easy process for the purchaser and simply becomes a short term buy and hold to maturity type of vehicle similar to a Certificate of Deposit (CD).
A life settlement is the sale of an asset, a taxable event. The tax specifics are up in the air in Congress and the courts. A Life Settlement is the sale of an existing life insurance policy by an individual who is typically 65 years of age or older.
A life settlement is a transaction in which an insured person sells a life insurance policy to a third party, receiving a fraction of the death benefit of the policy. The buyer pays the premiums on the policy and collects the benefit when the person dies.
Life settlements are usually defined as someone selling either a portion or their whole life insurance policy to someone for a lump sum of money. Life settlements are usually considered by people who no long have money for the monthly payments or those who need the money for other current expenses.
Life settlements are now being pitched as "free money" for wealthy people, but in reality they should only be used after careful consideration.
About the Author
Ben is a noted author and advocate for the elderly. He specializes in writing about the subject of Life Settlements and in how to obtain cash for your life insurance Click here to get your own unique version of this article with free reprint rights.
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