Consumers Tap into New Life Settlements

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According to a recent Wall Street Journal article, the sale of life insurance policies has become a new investment phenomenon. It is attracting the attention of people over 65 who own high-value insurance policies with escalating premiums.

For growing numbers of consumers, a life insurance policy has more value than they may realize.

According to a recent Wall Street Journal article, the sale of life insurance policies has become a new investment phenomenon. It is attracting the attention of people over 65 who own high-value insurance policies with escalating premiums.

The Sept. 21 article, titled “Selling Your Life Insurance to a Stranger,” describes how many life insurance policyholders feel the value of the policy does not justify what can be a formidable cost to maintain them. Yet these policyholders don’t want to let their policies lapse and receive nothing after investing thousands of dollars in them.

The life settlement process allows policy sellers to transfer their policies to a buyer who is then named as the beneficiary. The buyer pays the seller a percentage of the policy’s face value and continues to pay the premiums until the seller dies, at which point the buyer collects on the policy. The amount paid by the buyer is based on the age and medical condition of the seller and the face value of the policy.

With the blessing of the insurance industry and state regulators, many investment firms now specialize in the purchase of these policies, offering sellers a percentage of the policy’s face value. That is where certified cash-flow consultants come in. Such consultants can help sellers find those investment firms and negotiate the best price for the sellers.

Certified cash flow consultants, thanks to the training they have received from the American Cash Flow Institute, are able to assist in the sale of these policies. In addition to fully understanding the sales process, these consultants have access to many funding sources that sellers and even insurance agents may not be aware of, companies that specialize in the purchase of insurance policies.

Names and contact information for certified cash-flow consultants are available at the American Cash Flow Web site (http://www.americancashflow.com), where visitors can look up the names of consultants living in their area.

Life settlements are a new version of a well-established practice in the insurance industry known as “viatical settlements.” Terminally ill policyholders of any age who may want to cash out their policies to provide a source of funds to deal with medical expenses also can sell their insurance policies. Cash flow consultants are equally qualified to connect such sellers with qualified buyers. These settlements may be strictly governed by state and federal laws. One caveat to remember: There may be income tax liability imposed on policyholders entering into life or viatical settlements . Anyone thinking of doing so should check with their tax professional first.

About American Cash Flow

The cash flow industry is the fastest growing division aspect of the financial services arena today. The American Cash Flow Institute®, founded in 1988, provides an effective training program that prepares people to become consultants in the cash flow industry. The training offers comprehensive programs through which enrollees get practical, industry-wide information, taught by practicing industry professionals. ACFI remains committed to its graduates’ success by providing ongoing support through membership in the American Cash Flow Association.

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Marc Narine