This is the First in a Series of Personal Finance Articles from New York based Insurance and Finance Expert Mr Ed Ferrante. Exclusively available in the Final Arrangements News Journal.
Life Settlements Explained
Advice from the desk of New York based Insurance Agency the E.F. Ferrante Agency owner; Mr Edward Ferrante.
Mr Ferrante is considered an Insurance, Personal Finance and Estate Planning Expert in those personal service industries.
21ST CENTURY-STYLE "TREASURE HUNTS"
YES- there is "found money" in your current term, universal and whole life insurance policies; and no- you don’t have to die to enjoy the benefits of your current life insurance policies!
Many, if not most of you, have probably not yet heard of life settlements*, one of the most recent, exciting financial tools!
A life settlement is the sale of an insurance policy for significantly more than its cash value to an investor who keeps the policy alive until the insured dies.
Given that a life insurance policy is a very valuable asset, why should anyone consider selling it? here are several situations where a life settlement would be considered appropriate:
Ø You are 70 years old or older (although there can be age exceptions).
Ø Your policy is lapsing or being surrendered because it’s no longer needed for a variety of reasons. (i.e. paying the premiums has become a nuisance or converting your current term policy has become prohibitively expensive).
Ø You have outlived your beneficiaries.
Ø Another insurance or financial product better meets the needs for which the policy was originally intended and for whatever reasons, your existing policy cannot be rolled into it. perhaps your individual policy is being replaced with survivorship insurance.
Ø For estate tax planning reasons, it no longer makes sense for your policy to pay out as planned. your estate may no longer need insurance for liquidity.
Ø You can no longer pay the premiums and need relief from them. (if you are the officer of a charitable organization, which owns and is paying the premiums on a donated policy, this is an ideal solution for receiving a lump sum of cash vs. waiting for a donor’s demise.
Ø You need cash now, for a medical emergency, to assist your children or grandchildren (gifting for education), to supplement your retirement income, or, you have had a change in your health status.
Ø You are a company’s key executive who is retiring and no longer need to maintain insurance on your life. (can also be used a part of a severance package for your other key and non-key employees that are retiring, being down-sized, or otherwise terminated.
Ø You are the owner or CFO of a company that is going public, failing (Chapter 11 Bankruptcy) or being dissolved (Chapter 13/7)-thus eliminating the need for an existing Buy-Sell Agreement backed by life insurance (substantial amounts of badly-needed cash can be realized).
Ø You are getting divorced and the insurance policies owned by both yourself and your former spouse can be sold to obtain needed liquidity in a divorce settlement.
Ø When external factors occur such as market fluctuations, estate shrinkage, or estate tax law changes.
Ø During account management such as portfolio review, cash flow analysis or estate planning.
Though every Life Settlement transaction poses unique challenges, the process is simple and straightforward. It’s an exciting financial tool that can add value to both you, your estate, your net worth, and your organization.
*Not the same as Viaticals.
Although similar, Life Settlements are different from Viatical Settlements, which usually involve the sale of a policy for someone who is terminally ill. Although the policy is well-funded, the person can’t get the benefits immediately, when they are needed. so the policy is sold to someone for an immediate cash payment.
Next month in the “Found Money” Series- “Using Life Settlement Proceeds For Early Mortgage Pay Offs”
Edward Ferrante is the owner of The E. F. Ferrante Agency, based in Yonkers, New York. You may reach Ed at 914-961-9679, EST, firstname.lastname@example.org or via the following website: http://www.finalarrangementsnetwork.com , at: ED’S “FOUND MONEY” TIPS