life insurance policies
Life Settlements and Reverse Loans
I enjoy sharing articles about topics other than Reverse loans and I recently met with Ray Bernard who has been specializing in helping people who are on the verge of defaulting on their life insurance premiums, by converting their policy to a cash settlement.
I was vaguely aware of this as an option in lieu of losing the policy and in effect, throwing away all the money spent on premium payments, because for whatever reason, they are no longer able to continue the payments. Typically, it is due to a change of financial circumstances.
Of course, if the policy holder does “own” their home, they could continue to make their payments from the funds of a Reverse loan. However, if that is not an option for them, then a Life Settlement could certainly be the solution.
Ray provided a short summary of just what a Life Settlement is and it’s benefits. Following is a copy of it.
Americans are living longer than ever. That’s the good news! But with longer life spans, more and more seniors are dealing with health challenges and facing the reality of paying $3,000 to $6,000 per month for assisted living or as much as $10,000 a month for skilled nursing care.
So what does one do if their money runs out? For many, the answer could be residing in a drawer somewhere in the form of a life insurance policy. Yes, a life insurance policy. You know, the one purchased years ago to protect your children or your spouse in the event of your premature death.
If you’re lucky, it’s the kind of policy that has built up cash value over the years. And depending on how much you’ve invested and how long the policy has been in place, the amount of cash value could be significant. In fact, surrendering your policy could provide you with needed cash, but is that the right answer? Maybe, but there may be a better option:
· Life Settlement – You may be able sell the policy on the secondary market for many times more that the cash surrender value. You can use the proceeds for anything you wish.
· “Advanced Benefit” loan. This option allows you to pull cash out of your life insurance policy, but still retain the policy and its beneficiaries. You would no longer need to make premium payments, but the balance of the loan would be repaid from the death benefit.
· Paid up Benefit – You may be able to sell you current policy and use part of the proceeds to buy a smaller paid up policy to satisfy revised life insurance needs.
But what about term policies with no cash value? If it’s a convertible term policy, it may have value on the secondary market. Investors know that as long as the policy can be converted to a universal policy, the requirement that there will be a guaranteed death benefit as long as premium payments are made is satisfied.
According to a U.S. Government and Accountability Office (GAO) study, released 7/22/10, sellers of secondary insurance policies average 7 times more than the cash value from their insurance company. So before making a decision, talk to a licensed life settlement broker. It could mean the difference of tens or even hundreds of thousands of dollars!
If you have any questions for Ray, he can be contacted at the following:
M/A 2551 Galena St. #1802
Simi Valley, CA 93062
Toll Free Phone/Fax 800-496-8991