1. What is the definition of a life settlement?
A life settlement, or senior settlement, as they are sometimes called, involves selling an existing life insurance policy to a third party—a person or an entity other than the company that issued the policy—for more than the policy's net cash surrender value, but less than the net death benefit.
2. Who is involved?
THE POLICY OWNER: Usually, the policy owner is the insured person. However, this is not always the case. In some circumstances, the policy owner can be a family member, a life insurance trust, a charitable organization or a business.
THE FINANCIAL PROFESSIONAL: To include, life insurance agents, life settlement agents, registered representatives, financial planners, financial advisors, brokers, etc. to denote the person who interacts with the public in life insurance matters. They are responsible for meeting with the insured/policy owner in person in order to answer their questions about the life settlement process and to assist them in filling out all of the requisite questionnaires, applications, and authorization forms. The financial professional has a fiduciary duty to pass along the best offer to the policy owner.
LIFE SETTLEMENT BROKER – Invescor, Ltd. : Performs services related to the gathering, organization, or analysis of confidential information for the purposes of entering into a settlement contract such as obtaining medical records, documentation on existing coverage, and packaging the case for presentation to the marketplace. This information is provided through the efforts of the financial professional. Has a duty to offer the policy to more than one life settlement provider or financing entity for competitive bids and attempts to negotiate a life settlement by representing the policy owner to obtain the best offer. The life settlement broker has a fiduciary duty to pass on the best offer to the financial professional.
LIFE SETTLEMENT PROVIDER: A company that enters into a life settlement by providing the funds directly (purchasing policies for their own account) or indirectly (by acting as an agent of a financing entity and attempting to buy policies for the lowest possible price). The life settlement provider may have a fiduciary duty to the financing entity.
FINANCING ENTITY: Provides funds to effect a life settlement. They are companies (investors) who actually purchase the life insurance policy from life settlement providers. These companies can be hedge funds, pension funds, insurance companies, and accredited investors, to name just a few.
3. Seller Expectations
A prospective seller of his or her insurance policy can expect complete anonymity. We guarantee to keep all an insured's personal and medical information obtained through the settlement process in the strictest confidence. In addition, all insureds utilizing our services can expect that their settlement package will be professionally prepared and marketed to several life settlement providers and/or financing entities so as to find the best offer for their policy. Our goal is to generate strong competition for the purchase of a policy to assure that the best offer will be forthcoming.
A policy owner wanting to sell his/her policy, rather than having it lapse or surrendering it may realize the following benefits upon settling the policy:
- Relief from making future premium payments
- Additional funds become available to supplement income
- Potential for receiving greater financial benefits than by surrendering the policy
- Funds at your disposal for a "rainy day"
- Funds to use for overall comfort, to take a long- needed vacation, or for medical treatment
We believe that it is more beneficial to receive offers from more than one life settlement provider and/or financing entity. Invescor, Ltd.'s team of highly trained insurance and medical underwriters work to create a competitive bid market in which the policy owner receives offers from multiple life settlement providers and/or financing entities.
4. Who is eligible for a life settlement?
The potential candidate for a life settlement is typically aged 65 or older; has a life insurance policy with a face amount of at least $250,000, has a life expectancy of 15 years or less but greater than 2 years and has experienced a change in insurability since their policy was issued.
They should not have a catastrophic or life threatening illness or condition that is likely to result in death within 24 months.
Only the owner of the policy has the right to sell the policy.
