Life Insurance Settlements Overview
In the late 1980’s the first pre-death purchase of a life insurance policy for a terminally ill individual was consummated. A financial planner specializing in providing services for the terminally ill later coined the phrase “viatical settlement”. This term was intended to differentiate a third party transaction from other types of living benefits offered by insurance companies.
In 1996, this same process was applied to non-terminally ill seniors who were of normal health, but over the age of 65. Also known as Life Settlements, Elder Settlements, Lifetime Settlements and High Net Worth Transactions, the senior settlement strategy is gaining popularity in the financial planning community.
Today, it is estimated that over $1 billion in life insurance death benefits are sold annually.
Why would someone want to "sell" a life insurance policy?
Policies are sold for many and varying reasons. In some cases, the original purpose or need for the policy has changed or has diminished entirely.
Changing Circumstances:
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 Retirement
Change in estate size
Sale of a business
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Affordability of Premiums
Death of Beneficiary
Financial Planning Changes
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Other Issues:
What is meant by the "sale" of my policy?
A life insurance policy is an asset. Like other assets, such as real estate, stocks and bonds, a life insurance contract can be sold. All rights and obligations of the policy are transferred to a third party in exchange for a percentage of the contract’s face value. Upon death, the face value will be paid to the new owner.
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