Life Settlements White Paper Archive [2020 Guide]
Below you will find comprehensive guides to make it easier for you to understand the Life Settlement Industry. Original research and insights from the Magna Life Settlements team can be found for the following:
What you will learn:
Delving Into the Life Settlement Numbers
The Math of Life Settlements [Whitepaper]
The adage that knowledge is power is never more true than during retirement years, when seniors are faced with an array of decisions and often insufficient information to navigate those choices. When it comes to life settlements, we’re committed to educating consumers and their advocates by ensuring folks understand the math behind a successful life insurance sale.
In a recently published whitepaper, we guide seniors and financial advisors through the numbers that often make life settlements a preferred route over surrendering an unwanted life insurance policy. This is the perfect resource for individuals who like to look under the hood and understand exactly how—and why—a financial product works before they commit any money to it.
The paper looks at the variables that make life settlements favorable, specifically projecting how the failure to enter into a life settlement, for some people, could lead to a cost that exceeds the death benefit of the policy. A careful examination of the trends and formulas surrounding life settlements shows that seniors who forego a settlement may be leaving behind money that could help them pay mounting retirement costs.
While some consumers might want to get into the weeds and examine the math behind life settlements, this paper is optimal for financial advisors who might find themselves trying to present settlements to a client in a clear, concise way. Advocates who take the time to understand life settlement math can help seniors identify the most profitable window of opportunity in which to sell an insurance policy. That advisor can also use tools to estimate a client’s potential life settlement through the value of a policy, the policyholder’s health, future premium payments and the interest on future premiums.
Options to Get Rid of a Policy You do Not Want
At the time a life insurance policy is purchased, the policy owner has a very clear and compelling reason for making that decision—usually an assurance of protection for loved ones when the policy owner dies. But when the worst-case scenario of a premature death doesn’t happen and that person pays premiums for a long time, often he or she discovers that the policy has outlived its purpose. And that scenario demands a decision about how to deal with a policy that may have become a burden.
That situation can be confusing to someone without extensive understanding of the insurance industry, so we have created a whitepaper designed to clearly delineate the main options for unwanted life insurance policies. The three primary options for dealing with such policies are:
- Keeping the policy active and either continuing to pay the premiums or transferring the policy to someone else who will assume the payments.
- Letting the policy lapse and claiming the cash surrender value.
- Selling the policy in a life settlement.
Each of these routes have advantages and disadvantages, depending on the policyholder’s particular circumstances and the structure of the policy. As the whitepaper explains, life settlements maty yield significantly more money than a policy surrender if the policyholder meets the requirements for a favorable settlement.
For seniors or their loved ones who are confused about how to proceed with a life insurance policy that might no longer be beneficial, this Magna resource can open the door to an informed decision. For financial advocates, it can help provide the information a client needs to optimize his or her retirement income.
Eligibility for Life Settlements Guide [Whitepaper
When a senior is a good candidate for a life settlement, the cash from the sale of an unwanted insurance policy can yield up to four times the cash surrender value. That figure alone should make any individual looking to get value of an insurance policy delve into the details of life settlement eligibility.
Because a thorough understanding of life settlement qualifications is so important, we’ve put together a whitepaper outlining the chief variables in determining whether a senior is a good fit for a settlement. This resource will cover the two most important factors in the life settlement process: the insured’s level of impairment and the cost structure of the policy.
The paper will go into detail about each of those variables and their impact on life settlement eligibility, covering facts like the following:
- Surrendering a life insurance policy may not the best option for policyholders with serious health impairments, as they may not get the maximum value out of their policy.
- The more favorable the cost structure at the time a policy is issued, the more likely that policy is to yield a high life settlement amount.
- The most profitable combination for a life settlement is a favorable original cost structure and a high level of impairment.
The learning curve for life settlements can be steep, but after gaining a fundamental understanding of what a settlement is, the next step is determining whether you or your loved one is eligible to sell an unwanted insurance policy. Our whitepaper is one easy step to help you make that determination, and we also offer a life settlement calculator as a preliminary screening in the settlement process.
For seniors seeking to make the best decisions in personal finances, legacy planning and medical and long-term care, accurate and comprehensive information is imperative. Every day predators take advantage of seniors in scams designed to line their own pockets, so any legitimate product or option should be characterized by complete transparency. In the area of life settlements, an excellent starting point for an individual seeking to be thoroughly informed is our whitepaper entitled, “Has Your Life Insurance Policy Become a Liability?”
In 2015 alone, about $143 billion in life insurance was lapsed, and in many cases those policies could have been sold in life settlements if the policyholders were aware of the option. In fact, surveys indicate that 90 percent of seniors who allow policies to lapse would have considered a settlement if they were better informed. This whitepaper can help remedy that information gap by explaining in depth what a life settlement is, how the sale of an unwanted life insurance policy can be more profitable than other options and how to initiate the process.
The paper also examines the rising cost of insurance (COI) as a policy matures and that trend’s relation to the life settlement option, the changing tax codes and the ways they can benefit a policy owner who enters into a settlement and the variables that can combine to make a life settlement favorable for a consumer. The purpose is to demystify life settlements and show how they can often be the very best option for seniors concerned about steep retirement expenses.
According to the Insurance Studies Institute, 90 percent of seniors would consider a life settlement if they had more information about the option. More than half a million life insurance policies are allowed to lapse each year, and many of those policyholders could have received a better payoff in a life settlement. But what are the tools to allow more individuals access to settlement information? One of the most useful first steps is an effective life settlement calculator like the improved version developed recently by Magna Life Settlements.
A life settlement calculator is an online tool designed to give seniors and their loved ones an instant assessment of their eligibility for a settlement. The life settlement process involves a series of more involved steps, but the calculator is an excellent initial filter to let an individual know whether he or she should further pursue the option.
To use the Magna calculator, you only need to enter a few simple pieces of information: the amount of your policy’s death benefit, the type of policy you own, the date of birth, your health status compared to others your age, your gender and your contact information. After you complete those simple steps, our calculator will estimate your payout value if you proceed with a life settlement.
At Magna we are dedicated to providing the best resources to consumers, and it was with that goal in mind that we modified our original life settlement calculator to ensure the most accurate results. Many seniors believe that settlements are too complicated and impossible to pursue without a financial advisor as an intermediary, so our calculator seeks to remove that barrier.
“A more accurate life settlement calculator allows older Americans to quickly determine if their life insurance policy is likely worth more than its cash surrender value,” said Scott Harris, Magna’s chief marketing officer. “Just like Zillow or Kelly Blue Book for houses and cars respectively, having market knowledge of an asset’s value will help folks make a more informed decision about their personal finances.”
To calculate your potential life settlement payout in just a few minutes, start by visiting Magna’s calculator here. Based on your responses, Magna will assess whether a life settlement is likely or not currently, based on your responses. The next screen will give you a few different options. If your situation is unfavorable to a life settlement, you will can apply online to sell your policy or you may schedule a call with a Magna specialist who can answer your questions.
*Comments provided in this blog post are for informational purposes only and should not be construed as financial, legal or tax advice, recommendations or solicitations. Please consult your financial, legal or tax professional with questions related to the information presented, or for advice as to whether a life settlement is right for you.