Life Settlement Process in Wisconsin
As your children become adults, you sell your business, or you contemplate retirement, you may find there’s no need for the life insurance coverage you bought years ago. You might consider selling your policy in a transaction called a life settlement. Read on to learn more about the selling process, your potential payout, and how Monarch Insurance Partners can help.
Determining Selling Price
Most life settlements are funded by institutional investors looking for alternatives to stocks and bonds. The price they’re willing to pay depends on how much premium they still need to pay, the death benefit, and the length of time until they collect it – in short, the insured person’s life expectancy.
Since the value depends on life expectancy, ideal candidates for settlements are:
- Age 65+.
- Life expectancy of 14 years or less.
- Decline in health since the original policy was issued.
Also, the policy should have a death benefit of at least $250,000. However, even if you are young and healthy it’s worth contacting us to see if you qualify.
When you apply, expect to provide health information and medical records to come up with a life expectancy calculation. It might sound ghoulish but rest assured that the folks who determine this aren’t making predictions. They are simply applying statistical models to a set of variables to come up with a starting price for your policy.
The Auction Process
Once a starting price is set, the policy goes up for auction. Some life settlement providers offer policies to a few potential buyers, and some to only one! The auction process provides exposure to 18 of the top settlement providers (buyers) in the market, with the goal of driving the selling price up. Also important, Monarch provides full transparency of all offers, your life expectancy results, and any commissions or fees. Read more about the process here.
How Much Will You Receive?
The auction process has resulted in offers between 20% and 70% of the policy’s face value before commissions or fees. Life settlements may have tax consequences depending on your basis in the policy. We will work with your tax professional to estimate taxes during the process.
Contact Monarch at 608-620-0596 or schedule a phone call with broker Brad Mueller. With your date of birth, a brief health questionnaire, and some policy information, Brad can provide a written evaluation. Within a few days, we can tell you whether a life settlement is worth pursuing.
Valmark Securities supervises all life settlements like a security transaction and its’ registered representatives act as brokers on the transaction and may receive a fee from the purchaser. Once a policy is transferred, the policy owner has no control over subsequent transfers and may be required to disclosure additional information later. If a continued need for coverage exists, the policy owner should consider the availability, adequacy and cost of the comparable coverage. A life settlement transaction may require an extended period to complete and result in higher costs and fees due to their complexity. Policy owners considering the need for cash should consider other less costly alternatives. A life settlement may affect the insured’s ability to obtain insurance in the future and the seller’s eligibility for certain public assistance programs. When an individual decides to sell their policy, they must provide complete access to their medical history, and other personal information. Each client’s experience varies, and there is no guarantee that a life settlement will generate an offer greater than the current cash surrender value.