Obtaining a life settlement by selling a life insurance policy to a third party has become an important option in a wide range of estate planning, bankruptcy and divorce cases.
A rapidly growing industry is buying these policies for far more than their cash surrender value. Sales totaled more than $1 billion in 1999 and are expected to increase dramatically over the next few years.
In estate planning, a sale of a policy is useful in many situations where the client no longer needs the policy or can make better use of the cash, experts say.
In bankruptcy, a policy owned by a company might be sold to provide additional cash for creditors.
In divorce, spouses can point to the sale value of a policy and argue that it should be treated as an asset.
Over a dozen companies now buy policies from non-terminally ill people, and many more will start soon. It's "a booming new industry," says estate planning attorney Jon Gallo of Los Angeles, a co-chair of an ABA life insurance committee.
"I imagine only one in 10 lawyers is even aware" that such policies can be sold, but "lawyers need to know about it," says New York attorney Roy Adams, who spoke on the topic at the University of Miami's prestigious annual estate planning conference.
Continued: Using Settlements For Estate Planning
|Not Registered In Texas|
Life Settlements and Real Estate Investing Cash from Life Settlements can boost real estate holdings.Many seniors do not realize that there are no restrictions on the use of their Life Settlement proceeds...
Premium Financing. Affluent insureds can use leverage to buy life insurance using recourse and non-recourse premium financing. After two years, the coverage may be sold as a Life Settlement, or retained....
09/20/04 Preliminary Life Settlement Quotes Every policy holder and advisor. More..
09/01/04 The End of Costly Insurance Premiums In addition to providing cash, life settlements. More...
08/24/04 Life Settlements used for Estate Planning offer opportunities for professionals. More...
08/03/04 Life Settlement Market Benefits. What if a policyholder's preferences change. More...