Frequently Asked Questions about Life Settlements

New Jersey-based entrepreneur Bill Schantz owns and manages Harper Financial, Bedrock Capital, and Senior Settlements under the umbrella of Mid Atlantic Financial, LLC. In addition, Bill Schantz consults two life settlement funds, one in California and one in Florida.

Selling a life insurance policy that is no longer wanted or needed is known as a life settlement. Despite the increasing prevalence of such options, there are still many questions surrounding the process. Below are a few common life settlement questions and answers.

Question: What is the cash surrender value?

Answer: Most insurance policies have a cash surrender value that increases with each premium that policyholders pay. When policyholders terminate their life insurance contract before the policy term ends, they receive these accumulated savings. With life settlements, the cash that policyholders receive is typically four times the amount of the cash surrender value.

Q: Who qualifies for a life settlement?

A: In most places, the minimum age for a life settlement is 65 years. Commonly, policyholders have experienced a decline in health after they purchased their policy and have a coverage amount of at least $50,000. However, requirements may differ because of the policy purchaser’s requirements and state regulations.

Q: What type of policy can be sold?

A: Life settlement is an option for several types of life insurance policies, including group universal life, convertible term life, and individual universal life. Nonconvertible term policies can also be sold, though there are some exceptions to this, such as the policyholder’s overall health.

Q: What happens after a life settlement?

A: All ownership and rights related to an insurance policy are transferred to the new owner or investor. The former policyholders no longer have to pay insurance premiums, and they do not receive the death benefit of the contract.