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!
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 24, 2019Magna Life Settlements
The Top 8 Cities for Retirement in the U.S. in 2019
Once you reach retirement age, it’s important that you are able to manage your finances properly. Stretching the dollars you’ve saved may mean you’ll want an inexpensive place to live out your retirement. If you’re looking for U.S. cities with a low cost-of-living, check out our list below.
Where to retire in the United States in 2019?
8. Cleveland, OH
Cleveland’s annual living expenditures total around $36,000. This figure factors in important items such as your housing, healthcare and transportation costs. Frugal spenders who have managed to save a modest amount each year throughout their working lives will have no trouble managing their expenses in this city.
7. Augusta, GA
You can expect to spend $35,781 on an annual basis should you retire in Augusta. In addition to low costs for your basic needs such as food, housing, medical and transportation expenses, there are other reasons to choose this city in Georgia. Relatively warm summer temperatures are a major draw and many current residents report a high happiness index.
6. Brownsville, TX
There are several cities in the state of Texas that make excellent choices for retirement living. Brownsville is one such city, boasting a low cost of living of only $35,461 each year. Because it’s Texas, you’ll also enjoy warm or moderate temperatures all year round. If you want to experience other cultures, you’ll find a large Spanish-speaking community in Brownsville that is eager to welcome newcomers.
5. Toledo, OH
We’re back to Ohio, where you’ll only have to spend about $35,095 annually to enjoy a relaxing retirement lifestyle in Toledo. Groceries for an entire year will only cost you $3,375 and even the highest estimated expense – transportation – comes in at an annual total of $6,814. Current residents report high happiness across various age groups and enjoy access to many of the city’s amenities.
4. Memphis, TN
Memphis offers you warm temperatures and friendly greetings for just $33,859 in annual costs. The city combines a laid-back atmosphere that is perfect for easy-going retirees along with the amenities and upscale venues one might expect from a major metropolitan area. If you’re looking for a slower pace as you enter retirement, but don’t want to sacrifice the modern conveniences of a major urban area, you should definitely consider Memphis as your retirement destination.
3. Jackson, MS
A move to Jackson might be perfect for you if you enjoy distinctive culture coupled with a low cost of living. Annually, you’ll only need to spend $33,676 to enjoy a pleasant lifestyle in Jackson. This, combined with the area’s Southern charm and culture make it an appealing option. Jackson is also currently undergoing revitalization, so you’ll be able to see the old merge with the new during this transformation.
2. Detroit, MI
Detroit is another place where you’ll see history and culture come together with modern innovation. Retiring to this city will only cost you $33,356 each year, which includes everything from housing to transportation. The metro area borders Canada, so you can experience the unique influence of the early French settlers. While parts of the city are sparse, the city is still a modern metropolis with plenty to offer to keep you entertained during retirement.
1. Birmingham, AL
Birmingham tops our list because we’ve found that it’s one of the least expensive cities to live in across all categories. Housing costs are a little higher on average than some other cities we’ve cited here, but Birmingham makes up for that with much lower costs in most other areas. Average healthcare costs for this city are comparatively low, as are the transportation costs. Birmingham capitalizes on this by offering modern, urban areas and attractions at more affordable prices than some bigger cities. Even as you stretch your dollars, you’ll find plenty of opportunities for entertainment or new experiences here.
This list showcases our top eight picks for affordable retirement choices in the U.S. While we’ve given you the best overall annual average costs, keep in mind that these can vary somewhat depending on things like your specific transportation needs (public or private) and your grocery budget. Your personal finance plan may be able to reduce these costs even more.
February 22, 2019Magna Life Settlements
Financial Cleaning Tips for 2019
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.
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.
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.
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.
January 31, 2019Bethany Bradsher
The Impact of Rising COI on the Life Settlement Market
There was a time when the COI (cost of insurance) charge on a universal life insurance policy was virtually assured to stay stable. Those who purchased policies looked at historical trends and concluded that their premiums weren’t likely to go up because of an increase in COI, defined as the amount a policyholder pays to cover the value of the death benefit.
According to the Department of Financial Services a COI is the premium rate for a life insurance policy is based on two underlying concepts: mortality and interest. A third variable is the expense factor which is the amount the company adds to the cost of the policy to cover operating costs of selling insurance, investing the premiums, and paying claims.
But the landscape has changed, and universal policy owners find themselves in a season of uncertainty about COI and, consequently, the potential roller coaster trend in their premiums. In a recent presentation at a Life Insurance Settlement Association conference, QuantRes consultant Matthew Sheridan spoke about the uptick in COI and presented a model predicting which types of policies are most likely to be hit by the increases in the coming years.
According to Sheridan, his predictive model suggests that older, underpriced policies are the most likely to be hit with COI increases. It’s a trend with several different repercussions for those who sell or buy insurance policies on the life settlement market, including:
More interest in life settlements from policyholders
When COIs rise and premiums go up accordingly, seniors who are already living on a limited budget are often more likely to look into a settlement as a way to unload those premiums and bring in extra income. A life settlement isn’t the right answer for everyone, but anyone with a burdensome policy should calculate their potential eligibility for a settlement.
A movement away from universal policies
Consumers and investors alike are concerned about the stability of universal life policies due to the unpredictability of the COI increase trend. This upturn has led to more careful examination of different types of policies in search of more stable cost structures. If universal policies become less popular, the providers might respond to market forces and make moves to stabilize COI.
Our Magna life settlement experts stand ready to answer policy owners’ questions about their rising premiums and the best options for turning a burdensome policy into a needed financial windfall. To find out if the sale of your policy might be right for you, schedule a call with a Magna specialist today.
January 22, 2019Magna Life Settlements
What Are The Different Types Of Life Insurance?
Life insurance is something that many people don’t prioritize until it’s almost too late. We get busy with the demands of adult life–career, jobs, family–and then something happens to make us question our longevity. It may be time to sign up for life insurance.
While most of us might think term life insurance is the best option, life insurance is something that should be thoroughly investigated to make sure you are getting the most bang for your buck. There are many options available, and spending some time to understand the differences between insurance types will help you choose wisely in this decision that will not only affect you, but your whole family. Here are some types of insurance, with the features of each:
The Two Main Types of Life Insurance: Term Vs. Permanent
We may be familiar with these types of life insurance, but there are several sub-sects within each category that offer different benefits to the policy owner. Before we cover the intricacies of these policies, let’s get an overview of term vs. permanent and what they mean for you:
Term Life Insurance
Term life insurance is considered the most basic type of life insurance policy, because it awards benefits only upon the death of the policyholder. There is no build up of cash value, and after the initial term that is agreed upon when the policy is created, the policy ends. Contract length can run anywhere from 15 to 30 years, with some of the better companies offering a 1-year renewable contract option beyond the initial term. The terms of the contract and the premiums stay the same for the life of the contract. This makes it difficult for the policyholder to request additional coverage when the initial term ends, as they would have to re-qualify for coverage at an older age, with possibly a more questionable health status. In some cases it is possible to convert a term life policy over to a more permanent form of coverage.
Permanent Life Insurance
Permanent life insurance is a policy that remains in effect as long as the policyholder is still alive, and it retains cash value and in some cases, even appreciates in value. While premiums may be a bit higher, there is additional security in realizing that this type of coverage will not, like term life insurance, eventually cease to exist.
The Different Types Of Permanent Coverage
Whole life coverage is the simplest form of permanent coverage, for it allows those who are budget conscious to stick to a premium that remains the same for the life of the policy. There are advantages to beginning a whole life contract at a young age, since lower premiums remain in effect as the policyholder continues to advance in age and possibly developing some adverse health conditions.
Universal life coverage has some of the same benefits of whole life; death benefits are guaranteed pending the death of the policyholder, and the policy steadily grows in value, providing additional security upon maturation. One additional benefit of universal and whole life policies is that they can be borrowed against to pay down debt, to refinance, or to make large purchases, although this is not a practice that most financial advisors would condone.
Variable coverage grows in ways similar to whole life and universal coverage, but the policyholder has the option of taking a portion of his account and investing it in equities that have the potential to grow much larger than a life insurance policy normally would. This could potentially make cash payout at the end of the policy much greater. If you an individual that would be okay with a certain amount of risk to acquire growth, this might be the policy for you.
Survivorship coverage exists for families where it is necessary to insure more than one person. This type of coverage is generally less expensive than holding two life insurance policies. Some policies pay out upon the death of the first family member, while others grow in cash value until the death of the last surviving policyholder. These types of policies are ideal for people looking to maximize their cash growth while minimizing their out-of-pocket costs.
Final expense coverage is typically purchased by seniors ages 50 and above who do not want the burden of their funeral and burial expenses taken on by their survivors. With the average cost of a funeral estimated at about $10,000 today, final expense coverage is a welcome benefit to families already experiencing grief and loss.
No medical exam coverage is a benefit to people with pre-existing conditions that may not be covered by an insurance provider. While this is beneficial to those people, the coverage comes with higher premiums and lower overall benefits than policies offered to people willing to undergo medical exams.
Thanks to the wide variety of options, almost everyone can get the life insurance coverage they need at a price they can afford. Ultimately you will need to determine the best choice for your needs, but knowing a bit more about what is out there will allow you to make an informed decision. There is tremendous peace of mind that comes with knowing you’ve made the right decision for you and your loved ones.
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.
January 10, 2019Magna Life Settlements
Sell Your Insurance Policy and Leave a Legacy
Some older Americans find themselves looking for a way to leave a legacy and give back to their community during their retirement years. With enough money in hand for retirement and long-term costs, these seniors find that contributing their money to a charity of choice a fulfilling way to spend their retirement dollars.
For retirees who want to give their money to a good cause, a life settlement can be a large benefit because of the difference it can make for others. The sale of an unwanted life insurance policy can provide an unexpected source of income to be used for any need.
Examples of some ways life insurance proceeds can help build a legacy of generosity include:
A significant gift to a charity can go beyond its immediate impact to influence younger generations. When an individual donates money from a life settlement to a worthy cause, his children and grandchildren have an example of giving to others that they are likely to model in the future.
By liquidating a low-yield life insurance through a life settlement, a retiree can put the money into a high-return fund, directed by an advisor with an eye toward charitable giving. The fund may grow in value and make an even greater impact on selected charities.
Life settlement funds can touch the lives of family members and make memories at the same time. Some seniors choose to use their windfall for a special trip for the entire family, creating a once-in-a-lifetime experience that the family might not have enjoyed without those resources.
Some individuals pursue a life settlement because they need help making ends meet or paying for needs like medical care, but others find themselves in a comfortable financial situation and wonder if a settlement is worth pursuing. But since a settlement can help meet a charitable goal and make a difference in the lives of others, even those with plenty of money can benefit from the sale of a policy that has become burdensome.
Would you like to learn more about the endless possibilities sparked by a life settlement? Magna’s life settlement calculator will reveal whether you are a good candidate for a settlement, and a conversation with one of our specialists will help answer your questions about the criteria and the process. Contact us today.
December 10, 2018Magna Life Settlements
Bill HR 7203 to Allow Life Settlements to Fund Long-Term Care
A new bill being weighed by the U.S. House of Representatives would make provision for the tax-free rollover of life settlement proceeds into tax-free accounts dedicated to long-term care. The bill, H.R. 7203, was sponsored by Rep. Kenny Marchand (R-TX) and referred to the House Ways and Means Committee on November 30.
H.R. 7203, known as the Long-Term Care Account Act, would provide a significant benefit for seniors who are facing the daunting costs of long-term care. If those individuals have a life insurance policy that is no longer serving them, the bill would permit them to easily use the money from a life settlement to fund an assisted care facility, in-home care or other treatments deemed medically necessary.
The provisions of the Long-Term Care Account Act include:
Tax-free transfer of funds
The tax-free transfer of funds from a life settlement into accounts used exclusively for long-term care expenses. That money can be used for long-term care insurance or any “qualified health expenses” that a medical practitioner would recommend to treat health impairments or maintain health for retirees.
– As long as the distributions from life settlements into the long-term care accounts are used for their stated purpose, they will be exempt from any tax. If funds are used for unauthorized purposes unrelated to long-term care, those expenditures will be subject to both income tax and a 20 percent excise tax.
– If the funds distributed to the accounts from life settlements are not spent on long-term care expenses, they can remain in the account untaxed until the death of the account holder and that person’s spouse.
H.R. 7203 is a win-win for seniors
The Long-Term Care Account Act is a win for seniors looking for new revenue sources, pairing the prime opportunity of a life settlement with the pronounced need of long-term care. Rising health care costs during retirement are one of the chief reasons people over 65 investigate life settlements, and the passage of this legislation would link the two in a way that will provide tangible benefits to Americans seeking to make the most of their retirement years.
Please don’t hesitate to urge your elected representatives to support this important bill. For more information about life settlements or the pending legislation’s, you can contact a Magna representative by scheduling a call today.
November 30, 2018Magna Life Settlements
Trends in Today’s Aging Americans
Everyone who works with seniors knows that the American population is older than ever before, but what are the broader implications of this upward aging trend? How can people over 65 and their advocates optimize the retirement years? Dan Veto, a senior advisor for Age Wave, addressed these questions in depth at the Life Insurance Settlement Association (LISA) Life Settlement and Compliance Conference, held in Orlando in October.
Age Wave, considered one of the nation’s leading thought leaders on the aging U.S. population, engages in relevant research and consulting for a variety of industries that seek to enrich the lives of individuals over 65. Veto’s keynote was geared toward helping attendees understand how to best serve seniors in a rapidly changing demographic landscape. Early in his talk, Veto set the stage by pointing out that“two-thirds of the people in the history of the world who have attained the age of 65 are alive today.”
Research from Age Wave shows that 57 percent of seniors regard the retirement years as a new chapter in life, full of opportunity, versus “a winding down of life”(20 percent) or “a continuance of what life was” (23 percent).
More seniors surveyed about the factors that disrupted their work and retirement plans indicated that a personal health problem forced them to make different choices, and a gap exists between expectation and reality regarding the eventual need for long-term care. While just 37 percent of seniors believe they will need long-term care at some point, 70 percent actually do need it, and therefore many are ill-equipped for the financial demands.
The convergence of a multitude of factors, including rising health care costs, the age wave in America, and the growing gap between the average retirement age and average life span, has raised the profile of life settlements as a valuable option for seniors looking to meet unexpected needs and write the best possible last chapter for their lives.
“These social and economic trends create rising opportunities for life settlements as an option for some seniors who may benefit from an ‘equity release’ of a life insurance policy,” he said. “This may be an option for them to generate income to help fund their retirements.”
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