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What is a Life Settlement? [2019 Guide]

In many circumstances, a life insurance policy is an important investment that can benefit those left behind when a loved one dies. Many financial advocates would recommend life insurance to a client, but those same advisors understand that the efficacy of life insurance often runs its course. What alternatives exist for older policy holders who are still paying premiums despite the fact that their needs have changed and they don’t really need the policy anymore? It is possible that those individuals can sell their life insurance policy for cash value through a life settlement, in which a third party buys an unwanted insurance policy in exchange for cash. Here are some facts about the life settlement option:

The History Behind The Life Settlement Industry

The origin of life settlements dates all the way back to a 1911 Supreme Court case called Grigsby v. Russell. In the 1980s sellling an unneeded life insurance policy for cash became a way for people with diminished health to obtain funds for medical and living expenses. In the years since, legislation and tax laws have created a more favorable climate for consumers looking for options when an insurance policy is no longer needed. Statutes passed in the last five years now mean that 90 percent of Americans are protected by comprehensive life settlement legislation.

What Are The Benefits Of Selling My Life Insurance Policy?

The retirement years are costlier than ever, both because of the rising price of health care and the uncertainty of government resources like social security. A life insurance policy is an asset that can outlive its usefulness; the original beneficiary might not need the proceeds anymore, or the premiums have become burdensome. Under these circumstances, it is worthwhile for a senior to explore an option that can free up cash in the sale of that unwanted policy. Besides the obvious cash windfall, a life settlement also eliminates the premium payments that have depleted even more of a retiree’s limited resources.

Do I Qualify?

Two key variables dictate whether an individual would benefit from a life settlement: the policy holder’s level of health impairment and the cost structure of the policy. The two factors are related, where a policy issued with a higher rating combined with a poor health prognosis can result in a promising settlement offer. For example, if a universal life policy was issued at preferred-plus and the policy holder becomes significantly more impaired than predicted, a life settlement would provide a payout higher than the stated cash surrender value. Some policies are not a good fit for a settlement, and the owner may be better off to either surrender their life insurance policy for cash value, borrow against the policy’s value, or negotiate another option with their carrier. To find out whether a life settlement might be a good fit for you, visit Magna Life Settlement’s simple calculator.

What Are The Steps To Sell My Life Insurance Policy?

Because a life settlement can provide a significant cash payout to help pay for retirement expenses, no one should miss that opportunity 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 it works and how to start the process. Here are the basic steps of a life settlement:

1. Determine your eligibility. Using Magna’s calculator, first determine whether your medical status and the specifics of your policy make you a good fit for a settlement.

2. 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 us at Magna to determine how much your policy may be worth.

3. Submit additional healthcare data. At this point, you will fill out a HIPAA form protecting your privacy and submit your health data. This also helps us to determine how much your policy may be worth.

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 verify your policy value so that Magna can calculate an offer that pays out the maximum amount for your policy.

7. If your policy qualifies, Magna extends a formal offer. If you accept the offer, you will receive cash in exchange for the sale of your policy after the sale is complete. This closing process takes some time. Similar to buying a house, a life settlement involves signing contracts.

8. Magna takes over the policy. After the settlement transaction closes, Magna is responsible for paying all future premiums and receives the death benefit once the policy matures.

If you are interested in receiving a personalized life settlement estimate or have questions about the process, contact a Magna representative today.

*Comments provided in this 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.

Sell a Life Insurance Policy For Cash?

sell life insurance policy for cash

With the promise of the insurer passing over a pre-determined amount of cash to your beneficiaries upon your demise, you are expected to pay monthly or quarterly premiums to the insurer. But what happens when you are unable to pay or feel like you don’t want to continue with the life insurance policy? Can you sell life insurance policy to a third party and how much can you expect as the settlement? Most importantly, when is the best time to sell the policy to a third party?

So the question is can you sell your Life Insurance Policy?

It is within your rights to sell a life insurance policy that you no longer need to a third party under the life settlement clause. Ideally, the sale involves transferring your claim over the expected payout to a third party investor in exchange for cash. In effect, the investor offers immediate cash payment (also known as a buyout) and continues paying the premiums up to the time of your passing when they can then claim the full settlement from the insurer. Life Settlement companies like Magna, help you sell your life insurance policy form the comfort of your own home, or over the phone.

Sell Life Insurance Policy How much cash can you expect from the sale?

How much you receive from the life insurance sale depends on a host of factors set out by the third party investor. In most cases, the investor considers such factors as the value of the policy, your current health condition, and age.

The average settlement ranges from 20 to 25 percent of the value of your policy. The subject is nonetheless open to negotiations, and this has seen the settlement value shoot to as high as 50 percent of the policy size. You should, however, note that not every subscribed life insurance qualifies for settlement.

Eligibility for life insurance policy sale

Almost every third-party life insurance investor has eligibility criteria that they use to screen individuals seeking to sell their life insurance. Nonetheless, some of the standard procedures followed by most investors include the fact that you must be above 70 years of age and have a policy value of more than $50 thousand. Most companies also prefer universal, whole, and convertible term life policies.

The regulations are, however, not set in stone. Plus, the stiff competition has forced some companies to accept policies for individuals aged 65 years. Most investors will also overlook the age limit, especially if the insured is terminally ill with a life expectancy of less than two years.

When does settling a life insurance policy make sense?

Non-payments of premiums

Insurance companies may decline to honor a life insurance claim if you stopped or have been inconsistent with paying premiums. Therefore, in the event financial constraints make it impossible to honor the regular premiums, remember that you have the option to sell the policy in a life settlement rather than allowing the insurance company keep the money.

Medical expenses and emergencies

When pressed by large medical expenses that need to be paid up front, you can always count on the proceeds of the settlement. Though saddening, health complications may in actual sense raise the settlement value of the policy where the investors project a lower life expectancy.

How to maximize the settlement amounts that get to your bank

Life policy settlement is taxable under income and capital gains. With the government taxing the settlement, the last thing you need is a broker or insurance agent seeking to dig further into the little left. Maximize the amount of the settlement that gets to your bank account by working with inexpensive agencies, and, if possible, reach out to the investor directly.

Contact Magna Life Settlements to get a free estimate on how much cash you can get from your life insurance policy!

Financial Cleaning Tips for 2019

life settlements blog

Millions of Americans, even those who are in their retirement years, have only a poor grasp of their finances. They do not know about the many financial instruments available to them on the open market. Many do not even have a dollar saved for retirement. It takes years to build up good financial habits. However, one easy step that every American can take is financial spring cleaning. Financial spring cleaning helps people understand and then make the most of their finances during a designated period every year.

Financial Cleaning: What you need to know in 2019 and beyond!

Know what you have

The first step of financial spring cleaning is to bring all of an individual’s assets and debts together. This task may be no small burden. In order to do this, an individual should pull together the account balances and financial statements that make up their financial lives. These statements may include every credit card and bill to pay as well. In addition to simple balances, display all of the fees and interest rates that they pay on these accounts.

Consolidate accounts

This effort leads to the next step in the financial spring cleaning process. They may want to cancel credit cards with high monthly fees. Checking or savings accounts that charge high fees should also be reviewed and possibly cancelled so that those funds can be transfered into low-fee accounts. The process for these account changes can be tedious and cumbersome. As a result, it’s important to come up with a step-by-step plan to handle each problematic account.

For those accounts and debts that cannot easily be handled with a trip to the bank, financial spring cleaning can involve a plan to pay off any debts that an individual may have. It is helpful to restart the process of debt payment and arrangement every year since new debts may have been accumulated throughout the year. The best way to pay off debts is to arrange them by their interest rate. Families may want to shift payments to where they are putting as much money as possible towards the debt with the highest interest rate and then only paying the minimum payment on all of the other debts. Then, once the debt with the highest interest rate has been paid off, the individual or family moves on to the next debt and the debt after that until all debts are paid off.

Goals

The next step is to look at goals. Financial investment and savings should always be oriented towards goals. Simply throwing money into an account will break down the moment a severe expense pops up. One suggestion is to make savings goals and then devise plans to achieve these goals. While goals need to be specific numbers, they should not be immutable or unchanging. People need to be able to shift their goals based on major expenses, changes in salaries, or other contributing factors. Financial spring cleaning is a perfect time during the year to adjust different goals. It often occurs several months after a January raise or bonus and right around the time of a tax refund.

Reevaluate holdings

Finally, individuals need to reevaluate their holdings and where exactly their money is. When they bring all of their funds together, they will learn how much money they have in stocks, bonds, and other types of accounts. They will also be able to easily view the performance of those assets over time. Each website for accounts has graphs and charts that allow an individual to view their own progress. Financial spring cleaning is a great time to analyze the percentages of their funds that they have in each asset class. In some instances, an individual may have their money in an asset class that will most likely lose money in the short-term or the long-term. 


They may determine that they have too much risk or not enough to meet their goals. This is especially the case for people who are about to retire and have too much risk. They need to start tapping into the money in the near future and cannot withstand an unexpected drop in the stock or bond market of several percentage points. In those cases, they can use this time of reflection to shift their holdings around to different asset classes. This effort can be helpful in reaching the goals established earlier in the spring cleaning process.

Financial spring cleaning is a time for pause and reflection of an individual’s assets. It may not ensure that a person can immediately work their way out of debt or secure enough money for a comfortable retirement. However, it is critical for making money over the long-term and for reducing any confusion or inefficiency in an individual’s portfolio. Whether individuals have a large amount of money or almost nothing at all, everyone should at least consider a yearly financial spring cleaning.

Letting the Light In: The Value of Transparency for Life Insurance Policy Owners

It’s not entirely realistic to expect that consumers have a thorough understanding of every decision they make; for instance, a heart surgeon doesn’t need to explain every technical aspect of a procedure before a patient agrees to it. But when it comes to life insurance, transparency is a reasonable expectation.

With a host of different types of insurance covering varying payment options and coverage periods, life insurance has become increasingly confusing over the last few decades. But a recent study shows that most individuals who buy and sell life insurance believe it is their right to understand the product, its benefits and its limitations.

The 2017 Insurance Barometer Study, conducted annually by LIMRA and Life Happens, polled insurance consumers on the improvements they believed should be made to the life insurance process. Of those surveyed, 83 percent said that the most crucial factor in choosing life insurance was having a product that was “easy to understand.”  The study also found that 70 percent of insurance customers would like insurance to be offered without a physical exam, and 67 percent are looking for more transparency regarding risk and price when they shop for life insurance.

Just as consumers are owed a transparent process when they are purchasing life insurance, they should also have all of the facts when an insurance policy is no longer serving their needs. A life settlement is often a favorable option for seniors looking for extra resources in exchange for a burdensome insurance policy. As the life settlement market grows, so does transparency around consumer options when it comes to surrendering their life insurance policy. Recent legislative efforts, such as the life settlement regulation statutes that have been passed in 43 states, seek to make sure consumers have all of the facts about the life settlement option when considering giving up their life insurance policy. Consumer disclosure is a key component of many of those life settlement laws.

Life insurance, both at the beginning and the end of the policy’s life cycle, can serve both Americans and their beneficiaries, but consumers are not well-served when insurance carriers seek to obfuscate or inadequately inform them about the risks, benefits and parameters of an insurance policy. Similarly, consumers should have access to full information about their options regarding the sale of a policy. Try Magna’s simple life settlement calculator to understand how much value your policy could have and learn more about selling your policy by exploring our FAQs.

How Selling Your Life Insurance Policy May Help Your Retirement

retirement calculatorPlanning for your retirement can be a daunting experience. There is so much to think about, especially the amount of money you need in order to retire comfortably. Generally, the rule of thumb is that the money you may need when you ultimately retire should fall somewhere between 70 to 85 percent of your income. 

To estimate how much money you may need for your retirement years, you could estimate approximately how much you would be spending in the future. There are certain expenses you probably won’t have to worry about once you’re retired, including expenses related to your children. Your mortgage may be paid off, and you may not have to worry about commuting or other work-related expenses. 

At the same time, there could be new expenses, such as healthcare costs. And you may also travel more after retirement since you will have free time that you didn’t have when you were working.

You should maximize your income flow during your working years so that you can be comfortable after you retire. Following are some of the key ways to increase your retirement income.

Retirement Calculator: How to figure out your retirement score:

Social Security Benefits

Avoid withdrawing money from your Social Security benefits until at least the retirement age of 65 or 67 if you were born in or after 1960. If you continue working until 70, you will receive an additional benefit of eight percent for each year you wait to retire after age 65.

Company Benefits

If your employer offers company benefits, you can take advantage of them and choose those that can give you the maximum income after retirement. You can choose the right investments to reflect your age and risks in a 401k plan. Be wise about when you withdraw so that you can get the most benefit from the plan.

Personal Savings

You can use your personal savings toward your retirement income, but the better option is to make deposits to mutual funds, which can give you considerably more money in the future as they grow.

Whole Life Insurance

If you have a whole life insurance policy, borrowing against the cash value and investing the balance can give you more income when you retire.

Reverse Mortgage

A reverse mortgage can benefit you if you are 62 or older. It lets you free equity in your home and ensures that you don’t have to make future payments.

Avoid Debt

Finally, another good way to ensure that you can retire comfortably is to avoid the trap of debt. Be smart when using credit cards and when taking out loans. Always pay the maximum toward your balance on both in a timely manner. Avoiding getting into debt can help you enjoy full control over your finances. You can also live stress-free when your finances are in good condition. As a result, you have a better opportunity to retire with a sense of security.

The Hidden Financial Asset Most Retirees Don’t Know They Have

The Hidden Financial Asset Most Retirees Don’t Know They Have

Even seniors who have planned carefully often find that the costs of retirement add up, forcing some retirees to cut corners severely on everything from health care to travel to legacy expenditures like helping with college tuition for grandchildren. Everyone over the age of 65 wants the freedom to create a retirement that meets their needs and those of their loved ones, but to fulfill those hopes they might need to tap into a little-known resource that could turn a dead-end account into an asset.

Life insurance is property and therefore can be sold in a transaction known as a life settlement, but 90 percent of seniors let their policies lapse instead. Instead of lapsing a policy, seniors should first find out how much value their policy holds. A quick example of the hidden value within a life insurance policy: a 73-year-old man who chose to sell his policy learned that his $5 million policy would yield $1.55 million through a life settlement. If had surrendered the same policy back to the insurance company, he would have received just $210,000.

Here are some surprising facts about the hidden value of your life insurance policy:

1. Even though the life settlement industry has been around for more than 25 years, many seniors don’t know that they have the option of selling their policy because insurance companies haven’t been obligated to tell them about it. Thanks to state regulations, that’s changing.

2. This year alone, Americans are expected to make $3 billion in life settlements, putting money to work that would otherwise be lost if the policy was allowed to lapse.

3. The amount of a life insurance payout is directly related to two factors: the policy holder’s overall health and the cost of the original policy. A life settlement calculator can help a policy owner determine if their life insurance has any value.

4. The cash from the sale of a life insurance policy can be used to help fund long-term care, medical treatments, travel or family activities.

5. The life settlement industry is regulated by each state’s department of insurance, and eight states, with two more pending, have recently passed laws requiring insurance companies to disclose the life settlement option to their policy holders.

6. Seniors wishing to explore life settlements can start by calculating the payout value of their policy with Magna’s Life Settlement Calculator. The potential to turn a no-longer-needed insurance policy into much-needed cash might surprise you.

If you or a loved one is nearing retirement age or already navigating life through the senior years, it’s crucial to know the options surrounding old insurance policies. Life settlement companies like Magna stand ready to answer your questions and help you decide if selling a life insurance policy is right for you as you seek to optimize your retirement years.

Your Guide to Selling Your Life Insurance Policy

Life Settlement Guide 2019 - Official Magna Life Settlements Life Settlement Guide

2019 Life Settlement Guide – Magna Life Settlements Official Guide

In the 1911 U.S. Supreme Court case of Grigsby v. Russell, the Court ruled in favor of Dr. Grigsby after the physician was denied the rights to a life insurance policy that he acquired from a patient in exchange for medical attention. The individual sold Grigsby his policy for $100, and the doctor continued to pay premiums on the policy until the patient’s death.

Unfortunately, Grigsby was denied the benefits of the plan after the patient’s death because the executor of the deceased’s estate deemed the transfer of ownership as an unlawful wager on life, and therefore against public policy. Dr. Grigsby took his claim to the Supreme Court which ultimately ruled in favor of the doctor and affirmed a policyholder’s property interest in a life insurance policy and corresponding right to assign benefits as he or she pleases.

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