A life settlement is a financial transaction in which a policyowner sells an unneeded life insurance policy for more than its surrender value to an investor group.

Selling your policy can supplement your retirement income, free up cash that was being used to pay premiums, fund a long-term care policy, cover unexpected medical expenses or pay off debt. You can use the money for anything you choose.

And if you still need insurance, you can retain a portion of your coverage while eliminating your ongoing premium payments.

Most types of life insurance qualify, including universal life, whole life, variable life, survivorship, group life and even term life.

those who choose to Sell Their Life Insurance Policy receive on average more than four times what they would receive from surrendering their policy back to the life insurance company. (London Business School Study, June 2013). However, every case is different, the size of the payment is determined by factors such as your health, the type of insurance policy you have and the policy’s premiums.

Life settlement calculators are commonly misleading to owners of insurance policies. Typically just the size of the policy and the age and sometimes the general health of the insured. They only provide rough estimates of value that are often correct. Refused anything that might inadvertently mislead our clients.

The best and honest approach is that of Heritage, by focusing clients individual circumstances.

YES!

If your life insurance policy is at least $100,000 and you have had an adverse change in health, you may qualify to sell your policy.

Yes, you can sell your policy, eliminate premium payments and keep a portion of the death benefit.

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The Tax Cuts & Job Act of 2017 (TCJA) simplified the tax consequences of selling your policy. Unless an exception is met, the sale proceeds will be taxed as follows:

1. Tax Free – Proceeds you receive up to your tax basis (i.e., the total amount of premiums you paid over time) are not taxable;

2. Ordinary Income – Proceeds you receive in excess of your tax basis up to the amount of your policy’s cash surrender value are taxed as ordinary income; and

3. Capital Gains – Remaining proceeds are taxed as capital gains.

4. However, for insureds who meet the IRS definition of “terminally ill individual” or “chronically ill individual,” the entire amount of the sale proceeds can be received tax-free.