Life Expectancy Assessment Services
Seven out of eight life insurance policies do not result in a death claim.
Policy owners’ health or financial planning requirements or family situations change. Until recently, the only option available to owners of life insurance policies was either to surrender the policy to the insurance company for the cash value, or worse, to allow the policy to lapse. Life insurance policy owners faced a market situation in which a seller could only sell to one buyer, their life insurance carrier.
Now, with the emergence of a secondary market, policy owners can reallocate their assets from unneeded or underperforming life insurance. They can sell their policies just as they would sell equities, bonds, or even real estate.
The key premise of the secondary market is that the value of life insurance is best determined by independent market forces. Hence, the Life Settlement Industry provides a unique financial service to insurance policy holders, enabling them to utilize their life insurance policy as a liquid financial asset.
A Life Settlement involves the sale or transfer by a senior policy owner (typically age 65 or older) of an existing life insurance policy in exchange for a cash settlement. This Life Settlement provides less than the death benefit, but more than the policy’s cash surrender value.
Important criteria in the computation of the “present value” amount include the age and health condition of the insured, the annual premium payments, and a discount rate.
Most types of individual life insurance, including term, whole life, universal, and survivorship coverage, are acceptable for a Life Settlement. Typically the face amount of the life insurance policy appropriate for a Life Settlement transaction exceeds $250,000, and the coverage must have been in effect for a period of time of two or more years.
Policy holders seek Life Settlements for a wide variety of reasons. For example, retiring executives who have excess life insurance coverage in their “key man” policies can realize the proceeds from their Life Settlement to diversify their investments, or to eliminate outstanding debt. Monetary compensation from a Life Settlement may allow the purchase of survivorship coverage for estate tax purposes. Additional estate tax deductions can then be accomplished with charitable donations by creating a charitable lead trust or charitable remainder trust.
The Life Settlement market has expanded rapidly and that growth is expected to accelerate as the Baby Boomers move into their retirement years.
ISC Services will address the needs of customers in the Life Settlement market who seek the most accurate assessment of life expectancies.
