LIFE SETTLEMENTS
- Changes in your planning needs (e.g., retirement income needs, changes in estate taxes, business changes, etc.) and/or;
- Changes in the policy structure (e.g., carrier-imposed premium increases, reduced duration of coverage, and other policy performance problems)
When these situations occur, we work with you and your advisors by first analyzing the existing policy and examining the potential for a life settlement. Based on our findings and your objectives, we provide detailed analyses and recommendations of various options that may include:
- Allow the policy to lapse
- Surrender the policy for cash value
- Restructure the policy
- Exchange for a new life policy or an annuity
- Pursue a life settlement when a higher net value seems likely
In a life settlement agreement, the current life insurance policy owner transfers the ownership and beneficiary designations to a third party, who receives the death proceeds at the passing of the insured. As a result, the buyer has a financial interest in the seller’s death. When an individual decides to sell their policy, he or she must provide complete access to his or her medical history, and other personal information, that may affect his or her life expectancy. This information is requested during the initial application for a life settlement. After the completion of the sale, there may be an ongoing obligation to disclose similar and additional information at a later date. A life settlement may affect the seller’s eligibility for certain public assistance programs, such as Medicaid, and there may be tax consequences. Individuals should discuss the taxation of the proceeds received with their tax advisor. Valmark Securities, Inc. supervises all life settlements as a security transaction. Valmark Securities, Inc. and its registered representatives act as brokers on the transaction and may receive a fee from the purchaser.
