Life Settlement Summary
A “Life Settlement” is a bump sum settlement paid to the owner of a life insurance policy by one of several funding sources in discussion for the ownership of the policy. Never before have non-terminal policyholders been able to collect capital in excess of their policy’s money or surrender value to raise their wealth. A Life Settlement can usually offer anywhere from 2 to 5 times the cash submission value of the policy. “With the life settlement choice available, there is no reason to submission or lapse your life insurance policy.” says Grant Shell hammer.
Normally, anyone over age 70 who has $100,000 or more in life insurance attention may qualify for a Life Settlement regardless of health condition. Other issues considered in the discussions are the policy’s cash surrender values and the charge of premiums. A basic principle to recall is that the older the age of the covered and/or the more health problems exist, the higher the settlement. However, each individual’s condition is different from case to case.
The basics of the Life Settlement transaction have officially been around since 1989 in the form of “viatical settlements”. Individuals at any age can succeed for a viatical settlement if they have a long-lasting or terminal illness such as cancer or HIV. Viatical Settlements have always been depending upon the health of the assured, whereas Life Settlements are depending mainly upon the age of the insured. In most states a critically ill senior applicant will need to use a licensed viatical agent and/or funder in order to stand by state rules and regulations and to recall the tax-exempt status of the settlement.
According to business reports, Life Settlement proceeds are tax-free up to the charge basis (premiums paid since policy beginning). They are taxed as normal income from basis to cash submission value and proceeds above the cash submission value are taxed as capital gains.