Studies show that 9 out of 10 life insurance policies are in danger of being lapsed or surrendered by the owner. But, according to the National Association of Insurance Commissioners (NAIC), the value that a policy owner can receive through a Life Settlement can be significantly higher. A Life Settlement Evaluation will quickly determine if a policy owner would qualify to settle their policy while it is still in-force, and what percentage of the face value that they could receive today as a payout for their policy.
What Is the Life Settlement Evaluation Process?
Step One –Information: Submit policy owner information and a current, in-force illustration or copy of the policy.
Step Two– Analysis: Policy owner information is reviewed for age, gender, state of residence, and prevailing health impairments. The policy will be reviewed to understand the remaining time the policy will remain in-force and the cost of premium payments.
Step Three – Results: A policy valuation analysis is issued detailing what the owner could expect to receive as a percentage of the death benefit as a purchase price for their policy. A formal purchase and sale agreement is executed if the policy owner agrees to the valuation offer. The typical time it takes from opening the case to closing the purchase and sale of the policy is 60-90 days.
Health is a key factor in determining eligibility and value for a life settlement. The value of a Life Settlement is based on “reverse underwriting’ so the older and sicker a person is, the more they will get from a life Settlement. Someone too young and healthy will not qualify for a Life Settlement.
Qualifying for a Life Settlement is the opposite of qualifying to purchase insurance. In this case, the older and sicker the insured life of the policy is, the higher percentage of the death benefit the policy owner will receive in “present-day value”. This is important for seniors who are experiencing declining health and financial complications.
Individual or co-morbid medical conditions have varying degrees of impact on mortality. Three levels of conditions include:
- Minor Health Problems– Overweight, Elevated Cholesterol, Asthma, Arthritis, Cancer that has been in remission for 5 years or longer, Osteoporosis, Diabetes (type II), Hypertension, Ulcers, Atrial Fibrillation.
- Health Changed Considerably since Policy Issue– Hepatitis C, Pacemaker, Multiple Sclerosis, TIA, Sleep Apnea, poorly controlled Hypertension or Diabetes, Parkinson Disease, short-term memory loss.
- Serious Health Problems – Multiple TIA’s, Heart Failure, Coronary Artery Disease, COPD, Stroke, Heart Attack, Lupus, Emphysema, Cancer (recent or recurring), Cirrhosis, Coronary By Pass, Alzheimer’s disease, aneurysm, peripheral vascular disease, valve replacement or repair.
A person who would qualify to buy a Life or a Long-Term Care Insurance policy, would be too young and/or healthy to qualify for a Life Settlement. The typical age range for a Life Settlement is 75-92 with a remaining life expectancy of 10 years or less.