AIA Chiangmai

When delving deeper into the market-driven research on the myriads of reasons, motivations, and/or rationales for senior life settlements - seniors selling their life insurance policies have surfaced in recent years. According to studies by key industry players, policyholder rationales for selling life policies are to be identified on one of three levels, due to a combination of them OR influencers from all three levels working together to result in senior life settlement transactions:

Individual: cash-need for major expenses, outlived need for coverage, needing different coverage or features, financial distress

Family / Estate: Change in beneficiaries (e.g., divorce, death of dependents), Second-to-die policyholder (i.e., spouse) has passed away, material change in the value of estate

Business: Change in key executives / partners, change in succession plan (e.g., family business) or needing cash / seeking to monetize assets

(Source: Bernstein Research Call, Sanford C. Bernstein & Co., LLC, a subsidiary of Alliance Capital Management, 2005)

Other sources (Milestone Settlements, 2004) confirm that senior life settlements appeal as solutions to individuals most likely to consider a life settlement, because they, for one reason or another, no longer need the insurance they purchased. A number of reasons may include:

* Seniors whom have insurance and/or estate needs that have changed, making their current policy(s) inadequate or exceedingly adequate for their current or future needs

* Seniors who are not satisfied with the performance of the insurance product(s) they have chosen, or are aware of newer, better performing insurance products

* Seniors who choose to realize the value of their policy(s) now, rather than continuing to pay on a policy they will never receive the benefits of

* Individuals, or owners of a company, who own key man policies that are no longer needed, or elect to use the sale of the policy(s) to enhance a buy-out or create severance packages

* Seniors who wish to live out the remaining years of life without a change in lifestyle

* Individuals who need capital to pay for medical treatments or procedures

* Any senior who realizes that there is now a greater tangible asset value to their life insurance policy, and wishes to take advantage of this added value

A cautionary note seems appropriate here. Senior Life Settlements is definitely not territory to approach without the advice and assistance, counsel and due diligence of a well-versed, experienced player in this secondary market. A financial advisor with exposure and experience could advise you and assist you in become aware of any tax liabilities you may face should you sell your policy. Most times a life settlement is taxed on the income above and beyond the basis (what you’ve paid into your policy to date) of your policy. Each senior life settlement case is different and if seems prudent to have a consultation with a tax advisor or your financial planner prior to proceeding down the path of Senior Life Settlements.

Peachtree Life Settlements
Life Settlement Experts

Jon Thomas has been involved in finance and insurance,
specializing in emerging growth markets since 1979. He continues to write articles concerning the public and their pressing financial concerns.

Tags: senior life settlements, senior settlement, senior settlementssenior life settlements, senior settlement, senior settlements

Share This

Filed under: aiachiangmai03 | No Comments »

Ever wonder why your life insurance company doesn’t advertise life or senior settlements? It is actually in their best interest not to say a word because they make less money as a result of people that decide to go with the senior settlement route. But, still, just what is a senior settlement and how can it possibly be of any benefit to you?

Also known as a life settlement, a senior settlement is what happens when you sell your life insurance policy to a third party, such as a bank or similar financial institution. Basically, these life settlements are little more than lump sum insurance settlements that someone pays you for the death benefits your beneficiaries would receive upon your death from the life insurance companyonly you get this money while you are still alive! Confused yet? Don’t worry, senior settlements are only mysterious until you see how simple they truly are.

Basically, a company or individual investor pays you a percentage of the death benefits that your beneficiaries would receive when you die. They clearly cannot pay you what your heirs would receive in a normal life insurance settlement because they would not make any money doing so. Plus, these companies and businesses continue to pay the premiums on your life insurance policy until, well, the time of your death. They are taking a gamble on how long you might live so the younger you are when you enter into a senior settlement, the smaller the percentage is that they are willing to pay upon the total of your death benefits. So, what is in it for you and why even consider getting less money for your death benefits after paying those life insurance premiums for all those years?

The truth is that many of us buy life insurance when we are younger and less prepared for things like retirement. But as we age, we honestly tend to need life insurance less and less because we are generally better able to tend to our financial affairs than when we are younger. Upon our death, our loved ones have less to worry about at this time and therefore you may consider “cashing in” your life insurance policy. But, a senior settlement will generally payout much more than the life insurance company will give you in the surrender value. This is because, unlike senior or life settlements, the insurance company will surrender the money you paid in on premiums but will most likely not give you any of the money that they have made in interest off of your premiums over the years. A senior settlement, however, does give you some of that money and it will almost always exceed the surrender value paid by a life insurance company.

Senior settlements are not for everyone. But if you no longer need a life insurance policy that may have become obsolete and if you are looking to boost your nest egg or just have some more cash to invest for your retirement, you should consider a senior settlement. Senior, or life settlements, are not as mysterious as you may think and you will make out better than if you simply cashed in your life insurance policy. Just find out what your life insurance surrender value is and then shop around for some senior settlements and you will could be very surprised at how much more profitable they are in comparison. And just like any of your other investments make sure you know the real value of your life insurance before you sell.

Jim Prescott, CPA business consultant for over 30 years specializing in small and medium size businesses that range from closely held to publicly traded companies. Jim is a Partner in CPA firm Prescott Chatellier Fontaine & Wilkinson, LLP that offers audit, accounting, investment advice, tax planning services, estate plans, pension plans consulting and insurance advice. In addition to the CPA firm’s web site Prescott Chatellier Fontaine & Wilkinson, LLP you can find more information and Articles on Life Settlements at http://www.yourlifesettlements.com.

Tags: insurance settlements, Life Insurance, life settlements, senior settlements, settlementsinsurance settlements, Life Insurance, life settlements, senior settlements, settlements

Share This

Filed under: www.aiachiangmai.com 0102 | No Comments »

Insurance Settlements

Life Settlements - Liquidate your life insurance policy and receive money you can use now. Eliminate premium payments and get the true value of your life insurance policy. Life Settlements (Senior Settlements) let you benefit now from unwanted or unaffordable life insurance policies.

While there a many different types of life insurance policies, they generally fall into two categories - term and permanent.

Term

Term Insurance is the simplest form of life insurance. It provides financial protection for a specific time, usually from one to 30 years. These policies are relatively inexpensive and are well suited for goals, such as insurance protection during the child-raising years or while paying off a mortgage. They provide a death benefit, but do not offer cash savings.

Purchasing term insurance is like renting a home. It is a short-term solution. Monthly costs are usually lower, but you will not be building equity. Just as many people rent (while saving to buy a home), individuals who need insurance protection now, but have limited resources, may purchase term coverage and then switch to permanent protection. Others may view term insurance as a cost-effective way to protect their family and still have money to put into other investments.

Permanent

Permanent insurance (such as universal life, variable universal life and whole life) provides long-term financial protection. These policies include both a death benefit and, in some cases, cash savings. Because of the savings element, premiums tend to be higher. This type of insurance is good for long-range financial goals.

Purchasing permanent insurance is like buying a home instead of renting. You are taking care of long-term housing needs with a long-term solution. Your monthly costs may be higher than if you rent, but your payments will build equity over time. If you purchase permanent insurance, your premiums will pay a death benefit and may also build cash value that can be accessed in the future.

Renewable Term Insurance.

This policy allows you to renew coverage at the end of the term without having to submit medical information. The company renews your policy even if your health has deteriorated. However, the premium rate will usually rise with each renewal.

Convertible Term Insurance.

You can convert your term coverage into a permanent policy without providing evidence of insurability (usually a medical exam). Premiums for convertible policies are usually higher than for nonconvertible policies. Once converted, the premiums for the permanent coverage will be higher than those you are currently paying for the term policy for the same death benefit. However, the premiums for the permanent policy will now remain the same while the term premiums will continue to rise on renewal.

Level Term Insurance.

These policies provide a fixed premium for a certain number of years, usually 10 or 20 years, while the death benefit remains unchanged. The advantage is that you lock in a certain rate for the period of the policy. The disadvantage is that rates will jump considerably if you want to renew with another level policy.

Decreasing Term Insurance.

The death benefit in this type of policy decreases over its term. For example, you might start with $100,000 of coverage and the amount of coverage would decrease by $10,000 each year for 10 years. The premium will vary over the term of the policy.

Many financial experts consider life insurance to be the cornerstone of sound financial planning. It is generally a cost-effective way to provide for your loved ones after you are gone. It can be an important tool in the following ways:

Income replacement:
For most people, their key economic asset is their ability to earn a living. If you have dependents, then you need to consider what would happen to them if they no longer have your income to rely on. Proceeds from a life insurance policy can help supplement retirement income. This can be especially useful if the benefits of your surviving spouse or domestic partner will be reduced after your death.

Pay outstanding debts and long-term obligations:
Consider life insurance so that your loved ones have the money to offset burial costs, credit card debts and medical expenses not covered by health insurance. In addition, life insurance can be used to pay off the mortgage, supplement retirement savings and help pay college tuition.

Estate planning:
The proceeds of a life insurance policy can be structured to pay estate taxes so that your heirs will not have to liquidate other assets.

Charitable contributions:
If you have a favorite charity, you can designate some of the proceeds from your life insurance to go to this organization.
Insurance Settlements Amount

How is the settlement amount determined?
The settlement amount depends on which type of policy you have. Having inadequate insurance can affect the amount of compensation you get.

Replacement Cost and Actual Cash Value:
Replacement cost provides you with the dollar amount needed to replace a damaged item with one of similar kind and quality without deducting for depreciation-the decrease in value due to age, obsolescence, wear and tear and other factors. An actual cash value policy pays you the amount needed to replace the item minus depreciation.

Suppose, for example, a tree fell through the roof onto your eight-year-old washing machine. If you had a replacement cost policy for the contents of your home, the insurance company would pay to replace the old machine with a new one. If you had an actual cash value policy, the company would pay only a percentage of the cost of a new washing machine because a machine that has been used for eight years would be worth less than its original cost.

Suppose, also, that the tree damaged your 15-year-old roof so badly that it had to be completely replaced. If you had a replacement cost policy, the insurance company would pay the full cost of installing a new roof. If you had an actual cash value policy, it would pay a smaller percentage of the cost of replacing it.

Extended and Guaranteed Replacement Cost:
If your home is damaged beyond repair, a typical homeowners policy will pay to replace it up to the limits of the policy. When the value of your insurance policy has kept up with increases in local building costs, a similar dwelling can generally be rebuilt for an amount that is within the policy limits.

Some insurance companies offer a replacement cost policy that will pay a certain percentage over the limit to rebuild your home-20 percent or more, depending on the insurer-so that if building costs go up unexpectedly, you will have extra funds to cover the bill. These are called extended replacement cost policies.

A few insurance companies still offer a guaranteed replacement cost policy that pays whatever it costs to rebuild your home as it was before the disaster. But neither a guaranteed nor an extended replacement cost policy will pay for a house that’s better than the one that was destroyed.

Tags: insurance, premium, renewable term insurance, senior settlements, settlements, term insuranceinsurance, premium, renewable term insurance, senior settlements, settlements, term insurance

Share This

Filed under: www.aiachiangmai.com 0102 | No Comments »