Pinoy New Era Of Investment

The Life Settlement Process

As discussed, a vibrant secondary market for life insurance policies has emerged in recent years companies have raised pools of capital. These companies competitively bid on the purchase of an existing policy based on the insured’s current age, state of health and the overall economic environment. Those who qualify can now get a competitive market quote based on several bids. Here are the nine key steps associated with the life settlement process.

1. Need Realized. Consumer realizes a need or an advisor signals the option that he can sell his policy to the consumer.

2. Application. Policy owner completes settlement application and provides necessary documentation.

3. Documentation. Settlement provider acquires supporting documentation, verifying insurance and medical status. Settlement companies can work with either the advisor or directly with the policy-owner.

4. Review. Settlement provider’s insurance and medical experts review the file, determining its ultimate viability, including a review for potential fraud.

5. Policy Match. Settlement provider determines suitability for sale, and matches policy for appropriate funding. At this point, the settlement company may also determine that the settlement does not qualify, which ends the process.

6. Offer. Settlement provider relays the offer to client advisor or ultimate buyer. If the offer is declined, the policyholder can seek other offers with other settlement providers.

7. Closing Package. If the offer is accepted, a closing package is delivered to the advisor or client for review and signatures.

8. Notification. Signed documents are returned and the insurance carrier is notified.

9. Funds Transfer. Upon written verification of change of ownership, settlement funds are transferred to the selling policy owner from Trustee’s Escrow Account.

When the transaction is complete, the buyer – or life settlement provider – becomes the new owner of the life insurance policy, pays future premiums and collects the death benefit when the insured dies. The proceeds of the sale can be used in any manner the seller sees fit.