Know more about Life settlements and Viatical settlements
By Ron Victor
Published 03/27/2008 | Finance
Most of the life insurance policies are purchased to protect loved ones and to shield them from the "what ifs" in life. But in reality majority of these policies are never needed. Once the policies have served their purpose, the owners either allow them to lapse or surrender the policies to the insurance company for cash surrender value. This is where Life Settlements steps in to help. A life settlement is a financial transaction in which a policy owner possessing an unwanted life insurance policy sells the policy to a third party for more than the cash value offered by the life insurance company. Here the purchaser becomes the new beneficiary of the policy at maturation and is responsible for all subsequent premium payments. It is an asset just like a home, stocks, real estate, etc. This innovative wealth planning tool removes the burden of expensive insurance premium payments in addition to providing the lump sum cash settlement.
Life settlements are an important development that they have opened a secondary market for life insurance in which policy owners can access fair market value for their policies, rather than accepting the lower cash surrender value from the issuing life insurance company. This secondary market will give the policy holder a market that did not exist in the past. In prior years, the policy owner was left with only one entity to deal with it is their own carrier. This exciting alternative allows the policy owner to obtain institutional and real market pricing for this valued asset.
Life Settlement Benefits
This new service offers you and your client an opportunity to benefit from a wasting asset. Many life settlement transactions generate substantial capital, thereby creating the need for additional financial products or services. In some situations, a new and improved insurance policy may even be issued, benefiting both the client and you, the financial professional. The Life Settlement solution is typically the Win-Win scenario that you were looking for.
Whereas in a viatical settlement, a terminally or chronically ill person sells his or her life insurance policy to a third party for a lump-sum payment. In return, the third party takes over payments on the policy and is the beneficiary of the policy upon the death of the patient. Selling your life policy through a Viatical Settlement is available only to those people who suffer with terminal illnesses, and usually only if their life expectancy is less that 2-4 years.
Viatical Settlement Benefits
The main benefit of this settlement is the relief from monthly premium payment. Settlement income may be tax-free. Immediate cash is available to ease financial burdens. The policy owner receives additional money to compensate for loss of income. Funds to seek treatments which are not covered by health insurance and also the funds to pay off debts now, instead of burdening family members in the future. Viatical settlement policies pay a lump sum from 50% to 85% of the face value of your policy, depending on your life expectancy.Viatical settlement policy will pay the rest of the premiums. The insurance company will pay the policy's benefits to the VSP upon your death and your beneficiary will not receive the death benefit.
Ron Victor is a expert author for http://www.securelifesettlements.com/. He has written many articles like ideal life settlements, life settlement, viatical settlement.
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