Life Settlement

Get Top Dollar for your Life Insurance Policy from Institutional Investors

If you are 70 years or older, with a life insurance policy of $500,000 or above, chances are we can get you up to 3.5 times the cash surrender value in a settlement from an institutional investor—which is important, since you don't want an individual buyer of your life insurance.

At MPH Asset Management Co. we typically shop policies with at least 36 institutional investors to make sure you get the best deal available in the market—something that may be especially beneficial if you are already considering a cash surrender or a lapse of a policy.

To qualify you should be over age 70; have policy over $500,000 issued at preferred rates or a term plan that is still convertible to UL or whole life; no longer have a need for this life insurance due to death of a spouse, your business needs have changed, or your estate planning has changed; or you are retired and can no longer afford the premium.

To learn more about how the Life Settlement market has changed over the years, and if it is for you, email us, or call 1-800-543-3392 today.

Life Settlement FAQ

What is a Life Settlement and how do I qualify?

Life Insurance Settlements sales can provide a substantial return for an unwanted life insurance policy. You may also qualify by being over 70, have a life expectancy of 2 to 18 years and a policy over $500,000 in death benefits. If you have universal life, whole life or term life, and the term is still within the convertibility period, you may qualify. Once the settlement is agreed upon by you and the institutional investment group, assignments completed and you receive the agreed value, the new owner/beneficiary is responsible for all future premium payments.

The life settlement market affords those wishing to cancel, surrender or lapse their life insurance policy(s), a venue to profit on these policy(s). They may sell for reasons ranging from: death of a spouse, children raised, business has changed or unaffordable premium payments. There are a large number of domestic and international investors who might be interested in buying your life insurance.

A life settlement is proof that a life insurance policy is a valuable personal asset. Those with high premium payments or other reasons for selling can do so if they are over 70 and meet the required life expectancy. We only work with institutional investment groups for obvious reasons, and as they buy these policies as part of a much larger investment portfolio.

In summary, the life secondary market was spawned from the viatical industry of the 1980s and is a boon for policyholders. The new owner is the beneficiary and is responsible for all future premium payments. Those who choose to sell their life insurance policy often find themselves with the means to enjoy the rest of their life with a little more cash to invest.

Why would an individual, company, charity, or trust consider selling their policy on the secondary market?

Secondary market sellers include all of the above as all can benefit from a life insurance settlement, if after review, it is determined the life insurance is no longer needed. Reasons for selling may include: unaffordable premiums, changes in the federal estate tax, retirement, if business insurance may no longer be needed to fund a key man, or a trust may find that the policy is not performing as projected. The policy owner may want their favorite charity to have the use of the funds now rather than at death of the insured/donor. Selling to financial institutions in the secondary market can be done for a variety of reasons. Whether it has to do with premium affordability, estate tax changes or a charitable remainder trust or deferred compensation plan, a life insurance policy can be maximized as an asset through a life insurance settlement.

An unaffordable premium or a change in estate taxes can provoke one to consider a life insurance settlement in the secondary market. The desire to create a charitable remainder trust or the opportunity to cash out a deferred compensation plan may also spur you to seek out the financial institutions that can expedite this process.

If you fall within the acceptable life expectancy range, an institutional investment group may be interested in your policy as an asset they can use while concentrating on portfolio management.

What is the market value of a Life Insurance Policy and who would buy the policy?

Life insurance is an important part of your portfolio. Obtaining the true market value for your contract that can be enjoyed throughout the remainder of your life expectancy is our goal. Proper portfolio management means securing an insurance settlement that will benefit both parties. The amount of your life settlement will depend on a number of factors determined by: your life expectancy, minimum premium to age 100, policy loans, policy cash value and your carrier financial integrity, plus the marketing organization you choose. Always insist on full disclosure of all fees and commissions.

An institutional investor purchases many life insurance policy(s) as part of a total portfolio. Many variables determine market value for a life settlement, including the minimum premium required to age 100 and life expectancy. The best case scenario is one in which the policy owner and the institutional investment group achieve their goals.

Portfolio management is the reason a company will buy a life insurance policy and provide the insurance settlement. Determining life expectancy and minimum premium required in the future are factors that determine whether a company will make your policy a part of their portfolio. It is important to use a broker that works only with licensed providers. The market of institutional investment groups is small, so if multiple brokers are used, the investment group will not respond as the work that is involved for each consideration is too great, thus they may not quote at all. Another caution is captive investment groups that represent just one institution, thus your policy is not viewed by all available markets.

What is the taxation on proceeds from a Life Settlement?

Taxation on proceeds is best discussed with your tax advisor. Selling such an asset will also have an effect on your estate planning and portfolio management. Many factors come into play including the policy owner's tax bracket. In taxing a life settlement, typically the difference between the settlement amount and the policy cost basis is treated as a capital gain.

Estate planning and portfolio management will be affected by a life settlement. Consult your accountant to determine your taxable income as it pertains to the proceeds you are receiving. And make sure all your other taxation questions are answered before proceeding with such a monumental move.

How long does it take for an institutional investor to complete the settlement process?

Institutional investment candidates look at financial models with multiple interest rates to determine the best possible cash settlement. Simultaneously, an actuarial firm considers your personal medical history with two independent actuarial firms completing life expectancy studies. The institutional investment group, using your life expectancy studies along with all the financial information, will then determine the life settlement amount. The entire process takes 90 to 120 days in the secondary market.

Determining the life settlement of a life insurance policy is a process. An institutional investor in the secondary market will do their homework, employing actuarial firms to study personal medical history. Various models with multiple interest rates play a big role in helping financial institutions determine an accurate payout.

The secondary market is ripe with financial institutions, but the smart institutional investor will go the extra mile in determining a life settlement on a life insurance policy. An accounting of personal medical history by an actuarial firm is a must, and various models with different interest rates must be considered. As such, it is no surprise that the process can take several months.

An institutional investor wants to make sure they are going get a good return on investment. Financial models with various interest rates and actuarial firms considering personal medical history are just a part of the process.

Advisory services offered through MPH Asset Management Co, a Registered Investment Advisor. Securities and advisory services offered by Michael P. Hanley through KMS Financial Services, Inc. (California only) member FINRA and SIPC.

California Corporate Insurance license #0683322.

This site is for informational purposes only and is not an offer to sell or a solicitation of an offer to buy any securities or investment advisory services which may be referenced herein. We may only offer services in states in which we have been properly registered or are exempt from registration. Therefore some of the services mentioned may not be available in your state, and if not, the information is not intended for you.

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