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 06, 2019Bethany Bradsher
Best Blogs to Inform and Enrich Older Americans
Certainly, there are some in the over-65 demographic who still get their news from traditional newspapers and television newscasts, but the newer media can offer a breadth of perspective and information beyond what one can find through old-school means. Because blogs are accessible to anyone and space on the Internet is unlimited, seniors might be overwhelmed when searching for blogs that are worth their time.
Here are five websites with blogs that provide informative, relevant and entertaining content for seniors:
The New Old Age
Any blog published by the New York Times can be trusted for accurate and quality information, and this column by Times writer Paula Span covers everything from changes in Medicare and Social Security to specific medical issues for an aging population to current events like the potential concerns with gun ownership by seniors.
My Itchy Travel Feet
This site, subtitled, “The Baby Boomer’s Guide To Travel,” features detailed articles about domestic and international travel destinations, customized for seniors. For the past decade, seasoned travelers Donna and Alan Hull have chronicled their own adventures and also reported on topics like necessary travel gear for retirees, options for group tours or other organized excursions and the latest online travel deals.
Minding Our Elders
Aimed at caregivers and the seniors they care for, this site explores the challenges and joys of elder care with insight and heart. Founder Carol Bradley Bursack examines everything from caregiver guilt and isolation to ideas for helping seniors preserve their independence and dignity. Recent posts include, “Valentine’s Day: Celebrating When A Loved One Has Dementia” and “Some Risk Is Often the Price of Living, Even for Older Adults.”
Administered by Boston College’s Center for Retirement Research, this blog features articles on the most current financial research that can impact seniors, as well as extensive analysis on everything from retirement trends to new financial products for seniors. With a clean look and a foundation in trusted, academic sources, this blog will help retirees answer a range of personal finance questions.
A space especially for senior women, this blog provides a space for stories about women living out their retirement years in unique and bold ways, recollections from outside contributors and women-specific insight into current events that impact seniors. The site’s forum is a platform for women to support and inform each other, and the “ElderExperts” section features articles from experts on a range of topics.
These links are provided for your information and convenience only and are not an endorsement by Magna Life Settlements of the content of such linked websites or third parties. Magna Life Settlements has no control over the contents of any linked website and is not responsible for these websites or their content or availability. Magna Life Settlements makes no warranties or representations, express or implied about such linked websites, the third parties they are owned and operated by, the information contained on them or the suitability or quality of any of their products or services.
January 10, 2019Magna Life Settlements
Sell Part of Your Life Insurance For Cash
Many seniors who are informed about life settlements view the sale of their life insurance policies as an all-or-nothing proposition, but policies don’t actually need to be sold in totality. In some cases, a Retained Death Benefit (RDB) offer might better serve the needs of both retirees and their family.
The reasons for entering into a life settlement are varied, but often the sale of a policy is triggered by one of two factors: 1. prohibitively high premiums or 2. changing circumstances that negate the need for the insurance. But there are situations in which individuals still have the need to keep some of their life insurance’s death benefit for their beneficiaries. In those circumstances, a RDB can be ideal.
This solution could work well for a senior who has more than $100,000 in life insurance, since a policy must be worth at least $100,000 to be evaluated for a life settlement. Some policyholders have one large policy, and they might wish to collect cash for part of the policy and retain the rest for the beneficiary of their choice. Others have two or more policies, which might prompt the decision to sell one and keep the other for the sake of the policy’s beneficiary.
What are the advantages of pursing a Retained Death Benefit offer? As in any settlement, the transaction can yield a windfall to help with medical bills or other retirement expenses, but when a senior sells only part of his insurance assets he can still insure that the policy’s recipient benefits as well. In this case, the senior sells the policy and the investor is responsible for the premium costs. Then, upon the death of the insured, the life insurance carrier pays the senior’s beneficiary and the investor collects the remaining portion of the death benefit.
Seniors deserve to have control over their financial situation, and by carefully evaluating their life insurance holdings and needs they can make a decision that will give them the amount of insurance they need while still providing extra income. Life settlements can provide a key tool for individuals looking to optimize their resources during their retirement years and still provide for their loved ones after their death.
Magna’s life settlement specialists stand ready to help advise those looking to strike the right combination of life settlement and maintenance of insurance. Studies show that 90 percent of seniors let insurance policies lapse without being made aware of the life settlement option, and many of those individuals might have opted for a partial settlement if informed. Try our life settlement calculator or schedule a call with one of our specialists today.
November 29, 2018Magna Life Settlements
What Exactly Is An In-Force Illustration?
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.
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.
November 26, 2018Magna Life Settlements
Skyrocketing Premiums Present Challenge For Universal Life Policy Holders
Older Americans today have many excellent reasons to pursue the sale of a life insurance policy in a life settlement, but one of the most prevalent reasons is the prohibitive cost of paying premiums. And for those maintaining a universal life policy, a recent Wall Street Journal article reports that some are paying double or even triple their original premiums because of an historic drop in interest rates.
According to the piece by Leslie Scism in the September 19, 2018 Wall Street Journal, many policyholders are finding that universal life hasn’t held up well over time, especially when a decade of low interest rates have depleted the tax-deferred savings account linked to the policies. The savings accounts are designed to offset the cost of renewing the insurance each year, but as interest rates have stayed down the accounts have been insufficient to stave off skyrocketing premiums.
The article cited one case study in which a 55-year-old had purchased a $1 million policy in 1988 with an annual premium of $12,000. By the time that individual turned 80 in 2013, the savings account was gone and the premium had jumped to $50,000 a year. In another case, an 85-year-old retired teacher was paying $30,000 a year for his three universal life policies—three times the premiums when the policies were issued.
One expert on the insurance industry, John Resnick, told the Wall Street Journal that many seniors “are sitting on a ticking time bomb, and they don’t even know it.” The article goes on to say, “Universal life is among the reasons Americans are approaching retirement in the worst shape in decades.”
Those who believe they are stuck paying exorbitant premiums while also trying to fund retirement costs like healthcare and housing must be educated about options like life settlements. Rather than surrender a policy, an individual faced with prohibitive premiums might be able to sell his policy for a much higher payout.
Seniors shouldn’t let prohibitively high premiums chain them to a policy that is doing them more harm than good. Depending on the health impairments of the insured and the cost structure of the original policy, a life settlement could yield a windfall considerably higher than the surrender value. When premiums become burdensome or the purpose for originally purchasing the life insurance policy no longer exists, a life settlement can turn a liability into an instant asset.
Providers like Magna stand ready to answer any questions seniors or their advocates may have about life settlements, and they can even access our simple life settlement calculator to determine their eligibility for a sale of their policy.
November 19, 2018Magna Life Settlements
Magna Featured on Lifetime’s Designing Spaces
Designing Spaces on Lifetime Television featured Magna Life Settlements in November! During the episode, an older couple explored the process of a life settlement, the advantages of pursuing a sale of a life insurance policy and the various ways the cash from a settlement can meet the family’s needs during their retirement years. Clay Gibson, Magna’s senior vice president for origination, shared how families can benefit from life settlements.
The Joels, who were featured on the episode, are a retired couple looking to make their golden years golden. Mr. Joel started buying life insurance shortly after the couple got married, but the premiums became too expensive and he was considering either selling or surrendering the policy.
When their daughter Donna Eichner comes over to discuss the possibility, the Joels explain the possible benefits of selling a life insurance policy. Taking a life settlement would allow them to have additional funds for their retirement years. Mrs. Joel speculates on the ways they could use the extra money generated by a life settlement, including travel plans an donating to charity.
Clay Gibson explained, “Life insurance is actually property, and it’s property that can be sold. Half a million insureds are lapsing their policy every year, and that’s half a million insureds that could have come to Magna Life Settlements and received an offer above and beyond what the insurance carrier would have paid them for their policy.”
Mr. Joel enters his information into Magna’s life settlement calculator, and after viewing the results the Joels and their daughter conclude that a settlement is the wisest choice for their family. Their daughter, Donna, said, “I know myself and siblings are well taken care of, and now my parents can do what they want to do.” For the Joels, a life settlement will take an insurance policy that had become burdensome and convert it into a financial asset.
For families who, like the Joels, are seeking to make the most of their financial situation in their senior years, Magna life settlement specialists stand ready to offer information on the benefits of life settlements. Call today to consult with a Magna specialist, or visit the FAQ section of our website for more information on the particulars and process of settlements.
October 18, 2018Magna Life Settlements
Life Settlement Industry Report
The dynamic nature of the life settlement market guided the creation of a comprehensive Life Settlement Industry Report. To present the landscape of the life settlement market as a whole, this report relies on growth data over the past four years as well as the increasingly competitive nature of the industry. A thorough discussion of the three types of risk associated with life settlements helps flesh out the portrait of the settlement market, and a summary of trends in the industry casts an eye toward the promising future of the industry.
Among the key findings in the industry report:
The growth of the life settlement industry has surpassed the predictions of forecasters. Whereas a 2016 Conning report projected an annual growth of 1 to 2 percent, the market has actually grown an average of 34 percent over the past few years.
With an aging population and lengthening life spans, retirement costs and the prohibitive price of long-term care necessitate options like the life settlement that can increase a senior’s disposable income.
Many people in their retirement years struggle with monthly expenses but hold wealth in non-liquid assets like a house, land, securities or a life insurance policy. When an insurance policy is no longer serving their needs, it can be converted into cash flow through a cash settlement to ease the retirement burden.
To learn more, fill out the form and we will give you access to the entire industry report.
October 15, 2018Magna Life Settlements
Life Settlements are like Reverse Mortgages
According to the National Institute for Retirement Security, the deficit of retirement savings in the United States is between $6.8 and $14 trillion. As the cost of retirement precipitously rises, it’s more important than ever that seniors stay informed about sources of extra income like reverse mortgages and life settlements.
The features and requirements of reverse mortgages and life settlements are different, but each is a vehicle to create a source of extra cash for retirement. Seniors shouldn’t hesitate to do their own research and ask their financial advocates for information about these two opportunities that create immediate resources from long-held assets.
What follows is a look at the primary differences, along with some similarities, between reverse mortgages and life settlements:
A life settlement turns the liability of an unwanted life insurance policy into an asset through the sale of that policy for a cash payout. A reverse mortgage allows homeowners to convert part of the equity in their house into cash. Both create opportunities for seniors to find value from investments they have already made.
In most cases, life settlements are available for individuals over 65, although in some cases younger policyholders can qualify if they have certain health impairments. Reverse mortgages are generally a possibility for homeowners who are age 62 or older. Unlike life settlements, which are more favorable for seniors with health impairments, reverse mortgage eligibility has nothing to do with medical status.
Whereas both tools can help meet financial needs in retirement years, they differ in the amount and delivery of the cash payout. Life settlements are distributed in one lump sum, whereas reverse mortgages often come as a regular payment from the lender to the mortgage holder (hence the term “reverse mortgage.”) Another difference is the determination of the transaction value; in a life settlement, the amount paid to the policyholder is determined by the settlement market, while the payout in a reverse mortgage is determined by the appraisal value of the home. Both products have factors that can reduce their payout amount—the price structure of the policy and health of the insured for life settlements, and the presence of liens on the property for reverse mortgages.
Both life settlements and reverse mortgages are gaining in popularity among retirees, and seniors can find peace of mind in the fact that both are regulated—reverse mortgages by the Federal Housing Authority and life settlements through growing state laws that now cover 90 percent of the U.S. population. For more information on the requirements and potential benefit of a life settlement, visit Magna Life Settlement’s FAQ today.
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