A life settlement is the sale of a life insurance policy that is in force on the life of a living person. A life settlement offers you the opportunity to cash in a portion of your policy’s death benefit while you are still alive. This differs from cash surrender in 2 main ways: 1. Surrendering your policy means you relinquish it back to your original insurance company, while a settlement is arranged on the secondary life insurance market. 2. Surrendering your policy will fetch you only a predetermined amount of money, while a smart settlement often pays out substantially more.
No. You can sell either all of your policy or just a part of it. If you choose to sell only a portion, you will transfer only the part being sold and receive proportionated compensation.
After the settlement company has paid you for the sale of the policy, they have the right to check on your health status from time to time. If you wish not to be contacted about your health status, you may appoint another adult to be contacted on your behalf.
Within a specified period of time, yes. You have the right to cancel the life settlement contract for any reason whatsoever up to 7-30 days from receipt of settlement funds – varying from state to state. Guidelines and details are explained in the Life Settlement Purchase & Sale Agreement.
If the insured passes away at any time within 15 days after the transfer of funds, the settlement contract will automatically cancel. Any policy proceeds will go to the designated beneficiaries, less any monies paid for the purchase of the policy and premiums paid to the insurance company to keep the policy current.