Or, in another case, a grown-up with a policy of this kind needs money representing not for heirs but for personal needs - perhaps pay for long-term health care, travel or simply to be able to survive.
A life insurance policy is a financial instrument, an asset. Like all other assets, has a value. It is not only the face - value which shall be paid to the death of the owner, but some lesser amount a buyer can afford in order to meet the nominal value when the insured person dies.
The concept of the sale of rights to life insurance policies appeared in the 1980s, as the multiplied AIDS epidemic. Some patients lost their jobs; others require additional funds for medical treatment. Sell a life insurance policy could be a person with effective AIDS quickly.
The buyers of such policies have emerged, attracted because they believed that most sellers had a short life expectancy.
As AIDS was transformed from a judgment of almost certain death to a chronic disease, at least for many people in the United States, the necessity of such patients raise money for decreased medical treatment. And the market for this type of policy was reduced as life expectancy has increased.
But another category of people who were willing to the approach to their 70, sell, and is a group of buyers. The sale of a life insurance policy is called a Viatical, settlement if the owner is not expected to live more than two years, or a life settlement. They have different tax consequences, but the concept behind the two are similar, according to Gloria Grening Wolk, who has written three books on the subject, including "Cash for the Final Days" (Bialkin Books, 1997).
"Not going with the first one that makes you an offer", said Ms. Wolk, comparing that to accept the first offer for a home. A successful sale is "like a traditional auction" if people do well, he said.
Jonathan D. Pond, a financial planner in Newton, Massachusetts, said to sell a life insurance policy before death sometimes can make sense. "If you really need the money, there is no doubt, worth bearing in mind," he said.
Mr. Pond advises clients in need of money to first "seek other sources of money cash," such as housing, reverse mortgages and surrender value equity loans or loan life insurance policies. But the typical policy said, reserve a substantial amount as a benefit of death, even after of the surrender, so the holder may not be as effective as a buyer would pay.
The payment depends on a variety of factors, said William e. Massey, Thomson Reuters, including "age, gender, health, hope of life, type of policy and its value in cash," tax senior analyst if any.
If a policy is not already paid in full, the buyer typically takes on payments.
The amount of money that a seller receives ultimately may be affected by the tax laws. Viatical settlements are not subject to tax on income, said Mr. Massey, but are of life settlements and the amount depends on if the policy has a value of money in cash. Suggested that a seller to consult a tax professional to determine what would be the tax on a proposed sale or delivery, and that would be more beneficial.
States have been tougher regulation of buyers of settlement.
There is no "a legitimate purpose in settlements viaticals and life," said Kim Holland, of Oklahoma, Insurance Commissioner in which passed a law in 2008 regulatory solution buyers. He said that dear State sellers act carefully.
Necessary to face an avalanche of buyers outside of the State requested older residents and encouraged them to buy and sell, then policies, perhaps offering $35,000 or $30,000 for the rights to a policy of 1 million dollars, Oklahoma said. The new law imposes a period of two years of operation.
New York Governor David a. Paterson signed legislation in November impose regulations on settlements of life; until then, only Viatical settlements related to certification as unlikely to live more than two years, sellers are regulated.
Matthew j. Gaul, the Deputy Superintendent for life in the Department of insurance in the State of New York, said that the new law, which would be fully effective on May 18, will provide oversight of State on business solution.
There has been "abusive practices in the industry, buyers and brokers" that recruited to sellers, says Mr. Galo.
Offering advice to potential sellers, Mr. Gaul said such sales were "somewhat". where consumers really need store comparison between different vendors
"Bids obtained may be different from a provider to provider," he said.
Or, as mentioned by Mr. Pond, sellers need "much education" and a lot of homework to get the best treatment.
No comments:
Post a Comment