Viatical Settlements enable someone who is seriously ill to receive an advance cash payment for their life insurance policy. Life Settlements provide that same option to people 70 and over who no longer want or need their life insurance policies. This option may exist both for healthy seniors and those with health concerns. Settlements may be applied to any type life policy in most ownership scenarios.
You may be eligible for a viatical settlement if your life expectancy is 24 months or less. Generally, candidates for life settlements are: 70 years of age or older; Own a policy with a face value of $100,000 or more; Have owned that policy for more than two years.
Any scenario in which a qualifying policy is unwanted, unneeded, unaffordable or outmoded presents the possibility of a life settlement. Viatical settlements are transacted in scenarios in which the insured’s life expectancy is 24 months or less. Life settlement scenarios may include: The insured is facing a serious illness. The insured's health changes. The estate or tax law changes. There are changing personal circumstances, such as divorce or retirement. There are changing business circumstances, such as the sale or purchase of a business, bankruptcy, or a decreased need for a key-person policy. Selling a policy that is in danger of lapsing. The value of lapsed policies is enormous. Incredibly, 88% of all universal life policies lapse before paying a claim according to the March 4, 2005 Bernstein Report. Swapping an outdated policy with skyrocketing premiums for a newer model - a less expensive policy that's more affordable and a better value. A policy is simply not performing as expected. A replacement policy is warranted, especially one that in which you would normally use a 1035 exchange to fund the new coverage. The insured or owner could benefit from a different type of life coverage or having different, more appropriate owners. Wealth accumulation makes the policy unnecessary or wealth accumulation necessitates a new or different policy. Incidentally, it is possible in some circumstances to split a policy and sell a portion of a policy should there still be a need for some, but not all, of a policy’s death benefit.
Habersham Funding can work with virtually every policy type including term, whole, universal, variable, group or joint survivorship. Policies may be owned individually, or through a corporation, foundation, trust, non-profit organization or business.
The purchase price of a life insurance policy is based on a number of variables including the age and health status of the insured, the face value and type of insurance, and the amount of premium. For a confidential evaluation of your policy and a preliminary market assessment, contact a Habersham Funding case manager at 888-874-2402.
Once the decision has been made to pursue the option, a settlement application is completed. Completing an application does not obligate you to the transaction, and there is no application fee. The application allows Habersham Funding to assimilate the information needed to determine if your policy qualifies for sale and, if so, its value.
No. However, you will be asked various questions about your medical status and you will be asked to sign a release allowing us to review your medical records.
The settlement industry is increasingly highly regulated, and regulation is on a state-by-state basis. The very fact that the industry is highly regulated provides the comfort of knowing that the licensed entities involved in policy sales are governed. Responsible regulation is very important to Habersham Funding; in fact, the company and its principals have long been actively involved in the development of settlement regulation, through our industry association and independently. Habersham Funding has in-house legal counsel to ensure our compliance and to provide you and your advisors with complete information.
This question must be answered on a policy by policy basis based on the specific facts of your situation. Some portion, or possibly all, of your proceeds may not be subject to taxation. Although Habersham Funding does not provide tax advice, our team is available to help those selling policies and their advisors better understand the process and its implications. Consumers and their advisors should seek individual tax advice applicable to the specific transaction.
The secondary market for life insurance – which includes viatical settlements and life settlements – is now more than 20 years old. The settlement market came into the mainstream at the end of the 1980s and was primarily focused on terminally ill policy holders. By the mid-to-late 1990s the market had evolved to a point that it was focused almost exclusively on high-net-worth seniors for the purposes of estate or financial planning. Today, both viatical settlements and life settlements are mainstream financial solutions. In 2009, the settlement market was estimated to be in excess of 10 billion dollars.
If you have a question that is not answered here, call one of our case managers toll free at 888-874-2402.