Life Settlement Misconceptions

Written By: Kelly Ramirez on July 2, 2010 No Comment

Life settlements still aren’t common knowledge among the American populous. As a relatively new industry, there are many myths associated with the process and industry. Unfortunately, many of these misconceptions prevent some from learning more about a potentially beneficial financial service. With the right information, some people might find that a life settlement could provide a significant amount of money.

The life settlement industry is an evolution of the viatical industry that sprung up in the 1980′s and 1990′s to buy policies of AIDS patients. Now the life settlement industry overwhelmingly serves healthy senior citizens. Insureds absolutely do not need to be in poor health or have a terminal illness to qualify for a life settlement.

When someone buys a new life insurance policy, quite often a medical exam is required. However, when selling an existing policy in a life settlement no medical exam or doctor visit is required. A life settlement broker will request the existing medical records from the insured’s physician and then forward to an independent actuary for review. Those reviews are used by potential buyers to formulate their purchase offers.

While cash value can accumulate in many policies, it is not necessary for a life settlement. In fact, a high cash value balance in a policy may make it undesirable. Buyers sometimes have trouble making offers sufficiently attractive to sellers when the cash surrender value of a policy is excessive. In other words, high cash values means the policies become too expensive in some cases. The most attractive policies to buyers are ones with little to no cash value.

Life settlements are fairly straight forward transactions once the misconceptions are eliminated. Using a good, licensed life settlement broker is always key in having the best experience and gaining the highest offers. A broker should do most of the work and present the offers for a seller’s discretion.

Looking to find the best information on a life settlement, then visit www.life-settlement-index.com.