3 Tips On Planning Your Life Settlement

A life settlement is a way that many people use to raise funds from their life insurance policy. The idea behind a life settlement is that they sell their policy for an amount that is greater than the cash value. Then, they transfer the beneficiary status to the person who bought the policy. Once the benefits have been transferred, the policy is paid to the buyer upon the death of the seller. It is a very complicated financial transaction that can be beneficial to the buyer and the seller. The seller gets to enjoy the money while they are still alive and the buyer gets to realize a huge return on their investment. If you are considering a life settlement, there are a few things that you should take into consideration. 

1. Hire a Professional 

With such a growing market of life settlements, there are a large number of professionals that you can turn to. Handling a life settlement transaction can be tricky if you do not know what you're doing. There are a lot of legal ramifications involved and you have to be sure of everything before you make any decision. Accountants, attorneys, financial planners, wealth managers, insurance advisors and estate planners are just a few of the people that could oversee this financial transaction. You want to make sure that all of your bases are covered before doing a deal like this. Most people only do this once in their lifetime, so it is not something that they keep up to date on. A trained financial professional can guide you through the process from beginning to end. They can help you avoid some of the mistakes that many people make in the process.

2. Get Fair Value

When shopping your life insurance policy around, you'll want to make sure that you get fair value for your policy. For example, let's say that you had a $1,000,000 life insurance policy. Someone offers to buy the policy for $50,000. In most people's opinion, this would not be a fair trade. They are going to get $1,000,000 when you die; however, you have to live off of the $50,000. There is no set rule as to what is fair and what isn't. Just make sure that you feel comfortable with the transaction before agreeing on a price. If the person you are working with does not want to give you fair value, move on to someone else. There is someone out there who will. 

3. Have an LER Done

An LER is a critical component of a life settlement. An LER is a Life Expectancy Report which tells investors how long you may live. It is not a specific report for you, but it groups you together with other people in your same class. They will take factors into account such as your age, gender, race, smoking habits and more to determine a range that you could live to. The shorter the range, the more your life insurance policy is worth.

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