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Three Things Everyone Should Know About Life Settlements

by trycmcw

Life settlements have a variety of great benefits for many
policyholders, however, the fine print and complicated rules can
make the entire process a stressful experience. With some basic
information and proficient, expert help, it does not have to be
that way. To make the entire process a successful venture, there
are three things that every policy-owner should know.

Life Settlements VS Viatical Settlements

Although these two terms seem identical at first glance, there
is a significant difference between the two settlements. When the
owner of a life insurance policy is extremely ill and decides to
sell their policy, it is referred to as a viatical settlement.
When this occurs, the death benefit from the policy is paid to
the settlement company after the owner has passed away.

So long as there are no particular restrictions placed on them
by the state, life settlements occur when the owner of the policy
sells the policy for any other reasons beside an illness or the
quick approach of death. Some choose to sell the policy rather
than losing it by falling behind on payments while others use it
as a source of cash for a variety of reasons including the desire
to live a different lifestyle, gifts, or the acquisition of life
goals.

Life Settlements Are Negotiable

The amount of money paid out for life settlements is completely
negotiable and depends on the agreement that is made. Generally
speaking, the health, age, amount of the benefit, and type of
policy will determine the amount of payout that is offered. This
is what makes shopping around a vital component to a successful
settlement. Today, life settlement brokers will often take the
work out of it by doing the shopping themselves; they will search
through a list of funders to find the best offer. There will also
be some form of fee or commission charged by the broker in
exchange for his or her service. Regardless of the amount of the
offer, there is never an obligation to accept it.

What Happens Afterwards

Once the transaction is complete, the ownership and beneficiary
changes hands and the funder will be responsible to pay the
premiums. Any possible taxation that may occur with a settlement
payout is the responsibility of the original policy-owner. In
general, however, the amount of the original investment is not
taxed, but it is taxed up to the cash surrender value. Anything
over that amount is often subject to capital gains tax. The
settlement company may also contact the insured individual in the
future to find out about his or her current health status.

In some states such as New York, there are no regulations set in
place to monitor or control life settlements. In fact, agents do
not require certification or training in some cases making the
choice of a reliable institution extremely important.
Understanding the process and choosing reliable and expert help
is the best way to make the experience a smooth and easy
transaction.

Please note that IFG Insurance is not offering legal or tax
advice. Any discussion of taxes included in or related to this
document is for general informational purposes only. Current tax
law is subject to interpretation and legislative changes. You
should consult with your legal and tax advisors.

For more information on <a
href="http://www.ifgins.com/life_settle.php">Life
Settlements</a>, visit <a
href="http://www.ifgins.com">http://www.ifgins.com</a>.

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