Every year more seniors realize the benefit of exploring a life settlement to get an immediate benefit from an unneeded life insurance policy. As settlements become a more popular option, consumers are realizing that they can investigate and enter into life settlements themselves if they choose, without going through an advocate. But to go through that process, they must first understand the steps of a life settlement and define the terms of the industry. One of the most important steps is obtaining an in-force illustration.
An in-force illustration might sound like a concept only understood by insurance professionals, but in fact it is quite straightforward and a critical step in the life settlement process. After a person over the age of 65 does preliminary research into a life settlement using Magna’s simple calculator or through a phone call with a Magna settlement advisor, the next step is to obtain an in-force illustration from the insurance provider and submit it to Magna.
How can you obtain an in-force illustration?
Call your insurance carrier with Magna
Magna can help you gather an in-force illustration from your life insurance carrier. First, schedule a time for a Magna Case Administrator to call you. Together, we will contact your life insurance carrier to request an in-force illustration.
Call your insurance carrier and request an in-force illustration
Or you may call your insurance carrier by yourself. On the call with the insurance carrier, please request the following type of in-force illustration:
“Solve for minimum level premium to maintain the death benefit through maturity, solving for $1,000 of account value at maturity.”
Important facts about the in-force illustration
Projects the future costs of premiums
It projects the future costs of premiums through maturity of the policy, allowing a policyholder to accurately compare the costs and benefits of keeping a policy versus selling it in a settlement.
Comes from the life insurance carrier at the request of the life settlement provider
The in-force illustration finds the minimum premium liability until the policy matures (typically at age 100) and the net value of the policy is $1,000. Because the illustration uses current interest rates, it often produces results very different from the projections at the time when the policy originated.
It is a valuable tool for both consumers and settlement providers
Our Magna life settlement provider will schedule a call with a client, and together they will call the insurance company to request the in-force illustration. The results will inform both the client and Magna’s representatives about the suitability of a life settlement, and if the client decides to move forward the next step is a comprehensive review of the policy and an informal offer from Magna.
In-force illustrations are valuable for anyone with a life insurance policy
They keep consumers informed and eliminate unwelcome surprises if interest rates and premiums go up. But for those considered a life settlement, these illustrations are a critical step that illuminates the costs and benefits of holding onto a policy versus selling it for a cash windfall. Schedule a call with Magna’s life settlement expert today to learn more.
June 26, 2019Bethany Bradsher
Cash Surrender Value: Know the Facts and Understand the Options
When a life insurance policy has outlasted its usefulness, the first step is for a policyholder to consider the best next option, and for universal and whole life policies that process starts with determining that policy’s cash surrender value. In order to understand the surrender value and its potential benefits or drawbacks, an individual at an insurance crossroads should know how that number is determined, why a surrender could be the best option for some people, and whether a possible alternative might be more profitable.
How Cash Surrender Value is Found
When a policyholder makes premium payments over the years to a whole life or universal life insurance policy, a portion of those payments accumulate as cash value and part of that amount goes to the death benefit of the policy. Cash surrender value is essentially the value of the money the individual has put into the policy, with a few variables like the performances of the markets in which the insurance company invested your money and the subtraction of fees charged by the agency.
For universal life, the longer a policy is in effect and the more robust the markets that were selected for a policy’s investment, the larger the cash surrender value will be. The value of a whole life policy grows at a fixed rate designed to grow the policy to the amount of the death benefit when the policy matures. Term life policies do not have a cash surrender value. The cash surrender value should be readily available to the policyholder with just a simple request to the insurance agent. Periodic reviews of a life insurance policy are recommended for everyone, and through the review process the policyholder will be able to track the growth of the surrender value.
When Terminating a Policy Might Be Beneficial
Every situation is different, and some people might find that they need to retain their life insurance policy but still need to obtain some of the cash value that has accrued. In those cases, a policyholder might borrow against their cash value, arrange to pay premiums using the cash value or even take out part of the cash value while leaving the policy in effect (the second and third options are not recommended for whole life insurance policies).
But if the policyholder’s circumstances have changed so much that the death benefit is no longer needed, an individual might decide to surrender the policy in order to receive the net cash surrender value. If a policy has been in place for a decade or more and the policy’s investments have fared well, the cash value will be hit with fewer fees and surrender charges. In that scenario, it might be worthwhile for a policyholder to benefit from that money and stop paying premiums at the same time. Such a decision, however, should be made only after weighing the other options available for making a profit off of an unwanted policy.
A Better Option?
It is crucial for those with life insurance policies to understand the determination and amount of their cash surrender value, but that doesn’t mean that their best path is always surrendering the policy to get their hands on that cash. The more lucrative option, in many cases, is to pursue the sale of the policy through a life settlement.
Life settlements aren’t the right choice for everyone, but if you are a candidate for a settlement you could yield a payout that is significantly higher than the cash surrender value of the life insurance. The two chief variables that determine suitability for a life settlement are the impairment level of the policyholder and the cost structure of the original policy. Generally speaking, the more serious the health impairment, in inverse relation to a more favorable rating when the policy was issued, creates the best situation for a profitable life settlement.
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 could yield sums up to four times the stated cash surrender value. Despite the possibility of a significantly larger payoff, many seniors go with a surrender anyway and take the cash value, because they have never been informed about the potential advantages of a life settlement.
Every policyholder should be informed about the value of their policy and the options before them when the insurance is no longer needed. Magna is a trusted life settlement representative that also works with insurance agents looking to present the best possible scenario for their clients. Seniors interested in learning more about the life settlement option can use our simple life settlement calculator to determine their next steps, and agents can learn more about our services to partner with insurance professionals by viewing our resources here. With the right information, insurance policies that have become a liability can benefit policyholders and help offset costly retirement expenses.
May 09, 2019Bethany Bradsher
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.
May 09, 2019Magna Life Settlements
Sell a 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 insurancepolicy 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.
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!
May 07, 2019Bethany Bradsher
Questions to Ask Yourself Before Lapsing Your Policy
For a host of reasons, insurance policies that seemed like a good idea during an individual’s middle-aged years can become a burden as that person ages. There are undoubtedly good reasons for a policyholder to shed such an unwanted policy, but what many people don’t understand is that there are other options to lapsing a policy.
If premiums have become unwieldy, or the original beneficiary of the policy no longer needs the funds because of altered circumstances, the first reaction is often to let the policy lapse. What does lapsation entail, and why should seniors consider alternatives that could result in a better financial result? Here are three key questions policyholders who are considering doing away with their life insurance policies should ask themselves:
1. Do You Need The Policy?
The first step, for an individual considering getting rid of an insurance policy, is to consider the cost and future benefit and make a thorough determination of whether that policy is still necessary. Significant changes in income or family structure, in particular, may diminish the efficacy of a policy, especially if the intended beneficiary no longer needs the payout.
2. How Are The Premiums Affecting You?
For seniors, particularly those on fixed incomes with rising health care costs, continuing to budget for insurance premiums might not be the best use of limited resources. Additionally, depending on the structure of the policy premiums can get more expensive as the years go on. Seniors who are discouraged by this burden are often tempted to just stop paying and let the policy lapse rather than considering a more profitable alternative.
3. What Are My Other Options?
Even if policy holders are convinced that they would be better off without a particular insurance policy, they could explore the option to sell their policy before letting it lapse. Lapsation removes the premium burden, but it doesn’t compensate the individual for the money paid out in premiums over the years. Rather than let a policy lapse, more and more seniors are investigating life settlements, which allow for the sale of a policy for cash. Not everyone qualifies for a life settlement, but for those who do qualify, it provides a way of unloading a policy that has become a liability. Find out if you can turn your life insurance policy into asset today by scheduling a call with a Magna life settlement specialist or trying our simple life settlement calculator.
*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.
March 24, 2019Bethany Bradsher
When Families Change, Life Insurance Needs Can Change Too
When someone takes out a life insurance policy in their ‘30s, ‘40s or ‘50s, that purchase is predicated on assumptions about the future of the policyholder’s family. But unexpected changes to the family structure can occur over the years, and for seniors those changes might lead to the consideration of a life settlement.
Insurance For Your Family: What You Must Know
The most common family change, with obvious insurance ramifications, is divorce. Often a person buys life insurance, names their spouse as a beneficiary and later gets divorced, voiding the need for a policy that will support the surviving spouse. If the policyholder is over 65 and paying into premiums unnecessarily, a life settlement can turn that situation around and provide a windfall rather than burdensome expenses.
In the same way, a senior who undergoes a divorce and then gets remarried later in life may want to schedule a life insurance check with their broker to guarantee that the coverage serves the needs of the policy owner and his or her new spouse. A new policy with a new beneficiary might not be practical or affordable if the remarriage happens late in life, but that new family could be eligible for a cash windfall through a life settlement that they can enjoy in their retirement years.
Insurance Policy Review
If an insurance policy is structured to benefit children or grandchildren, the addition of family members through birth or adoption could prompt an insurance re-evaluation. Some policyholders, particularly seniors, opt to sell their policies and use the proceeds for college funds or other legacy investments rather than an insurance policy that will pay out after their death. Seniors who create educational funds for their grandchildren can have the benefit of watching those young people take advantage of higher education and make steps toward building their futures.
Life Events Lead to New Insurance Needs
Change is inevitable in life, and changes to families—whether welcome or unwelcome—can create new investment and insurance needs. Seniors with a thorough understanding of their financial options will provide the richest opportunities for themselves and their loved ones, and those facts are available from trusted financial advocates or specialists like the ones at Magna Life Settlements. If you have seen changes in your family and believe that a life settlement could be a better use of your resources than an unneeded life insurance policy, set up a call with a Magna advisor or try our simple life settlement calculator today.
March 18, 2019Bethany Bradsher
Understanding Long-Term Care Insurance Options
Whether or not they prepared financially for it during their working years, the need for long-term care is a reality that most seniors must eventually face. Every situation is different, but most people as they age will either need long-term care themselves or find that their spouse needs it. Without proper planning, that can be a sobering truth indeed.
Long-Term Care Insurance Options for You
A 2017 study by Genworth Financial shows that long-term care, independent of medical bills, costs seniors anywhere from $18,000 a year (adult day care) to $97,000 a year (private room in a nursing home). And it’s a scenario the majority of seniors will face; about 70 percent of 65-year-olds will incur some type of long-term care costs in their lifetime, at an average cost of $138,000 per person.
For those who start thinking about long-term care resources in their ‘50s, purchasing a long-term care insurance policy could be a prudent option. But the premiums generally cost between $2,500 and $5,000 a year, and a senior will need to keep paying for the insurance after retirement. As with all insurance, it’s a gamble to theorize whether the expenditures in your younger years will be worthwhile, since no one knows how healthy their retirement years will be.
Other Options for Long-Term Care
Another option, and a relatively new product, is a life insurance policy with a long-term care rider. These policies are structured to allow for life insurance payouts when the policyholder is younger and has beneficiaries to protect, which will turn into long-term care coverage in that person’s later years. The rider accumulates the most value when entered into in a person’s ‘40s or ‘50s.
When a senior faces a dire need for long-term care, other options do exist to help fund that expense even if that individual didn’t plan for it in his earlier years. Some seniors liquidate assets like houses and cars, which they no longer need if they are moving into a care facility, to pay the bills. Others, if their assets have become depleted, can use Medicaid to help pay for continued care. But those who don’t wish to drain their resources or find themselves restricted to Medicaid-accepting facilities might find themselves in a bind with a pressing need for an alternative income source.
Life Settlements for Long Term Care Needs
Enter life settlements, in which seniors sell unwanted life insurance policies and receive a cash windfall that can be used for long-term care needs. Not every individual qualifies for a settlement, but declining health can often increase the odds that a settlement will be favorable. To learn whether you or your loved one could pursue a life settlement, try Magna’s simple life settlement calculator, or schedule a call with one of our specialists today.
February 21, 2019Magna Life Settlements
How A Life Settlement Impacted My Family
Years before he joined the life settlement industry, Magna’s Senior Vice President Clay Gibson was impacted by his grandfather’s decision to sell his life insurance policy. In a personal essay, Clay shares how his grandfather’s life settlement made an impact on his family.
“My grandfather was in his late ‘70s in 2002 and even though he had some minor health issues he realized he was likely to live for quite a few more years. Decades earlier he had taken out two life insurance policies, each worth $1 million, one in his name alone and one in the name of he and my grandmother. If they held onto the policies, they were going to have to start paying increasingly expensive premiums again.”
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.
January 22, 2019Magna Life Settlements
How Selling Your Life Insurance Policy May Help Your Retirement
Planning 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.
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.
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.
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.
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.
Get cash for your policy and start living a better life now