How Do Life Settlements Work?
Because a life settlement can be an excellent source of income to help pay for retirement expenses, no one should miss that windfall simply because they don’t understand the life settlement process. As the word gets out about the potential upside of life settlements, seniors who are likely to benefit from these transactions need guidance about how to start the process and how it will transpire. Following are the steps of a life settlement:
1. Determine your eligibility. Using the Magna Life Settlement’s simple calculator, first determine whether your medical status and the specifics of your policy make you a good fit for a settlement.
2. Decide if you want to involve an advocate. The representation of an advocate, such as an agent, advisor or attorney, is not necessary for a life settlement; many seniors handle their settlements on their own. But if you feel more confident working with an advocate, you will want to get that person early in the process.
3. Submit an in-force illustration. With the help of a Magna case administrator, you will request an illustration from your life insurance carrier that spells out what the minimum premium costs would be if you kept the policy until it matures – typically at age 100 – and if the net policy account value at maturity was $1,000. This allows both the client and the advocate to determine the potential costs and benefits of a settlement.
4. Submit additional paperwork and schedule medical interview. At this point, you will fill out a HIPAA form protecting your privacy, complete a medical questionnaire and schedule a time for an interview about your health history.
5. Wait for Magna review and informal offer. Then, your Magna representative will calculate the value of your policy and decide whether or not to make you an informal offer, pending the next steps of information gathering.
6. Magna obtains medical records and life expectancy report. These reports provide vital information so that Magna can calculate an offer that pays out the maximum amount for your policy.
7. Magna extends a formal offer. If the seller accepts the offer, he or she will receive cash in exchange for the surrender of a policy.
8. Buyer takes over the policy. After the settlement transaction, the buyer pays all future premiums and receives the death benefit upon the death of the insured.
If you are interested in receiving a personalized life settlement estimate or have questions about the process, contact a Magna representative today.