A CONSUMER GUIDE TO LIFE SETTLEMENTS

Transcription

1 A CONSUMER GUIDE TO LIFE SETTLEMENTS IAGLSA-ID-BROC 1.0 Page 1

2 Maximizing the Value of Your Life Policy Building the Foundation of Trust IAG Life Settlement Advisors is committed to its clients, first and foremost. Utilizing our industry knowledge, best practices, and resources available, IAG Life Settlement Advisors is able to deliver opportunities with lasting value for our clients. Your unwanted life insurance policy can be an incredible asset. IAG Life Settlement Advisors can obtain more money for your life policy through a life settlement than you would receive through a surrender. It s simple, it s easy, and it s free to seek offers. Vision Dedication Integrity Results IAG IAGLSA-ID-BROC 1.0 Page 2

3 A Consumer Guide to Life Settlements TRANSFORM YOUR LIFE POLICY INTO WEALTH WITH IAG LIFE SETTLEMENT ADVISORS THE BASICS What is a Life Settlement? A life settlement is a transaction in which you sell a life insurance policy that you own to a third party. You receive an immediate cash payment for selling your policy. The purchaser becomes the policy s new owner, and is responsible for future premium payments. When the insured dies, the purchaser receives the policy s benefit. Why would I want to sell my policy? If you would prefer to have more money now rather than a future death benefit, you should consider a life settlement. There are many reasons why your policy may no longer meet your needs, including changes in your family, in financial circumstances, in tax law, and in your policy s performance. A life settlement can give you far more cash for your policy than you would receive from surrendering it to the insurance company. How can a life settlement get me more money than surrender? If you surrender your policy to the insurer, they will cancel your policy and return any cash value to you. That cash value doesn t take into account the value of the death benefit you are giving up. A life settlement pays you the cash value plus a portion of your death benefit s value. How much more could I get? On average, major life settlement providers (purchasers) report paying about four times the cash surrender value for a policy. In other words, you could get about 300 percent more money through a life settlement. IAGLSA-ID-BROC 1.0 Page 3

4 What can I do with money from a life settlement? Whatever you want it s your money. Some common uses include: Saving for future health care or retirement costs Making gifts to loved ones or charities Paying of debt Making investments Fulfilling dreams such as a long-delayed trip overseas. ELIGIBILITY Who is eligible for a life settlement? Generally, you may be eligible to sell your policy if: you directly own it (or it is owned by a business or trust that you control), and the insured (the person whose life is being insured by the policy) is at least age 70 (although in some cases the insured can be as young as 60). Does the insured have to be in good health? No. In fact, you are more likely to be eligible if the insured has some medical conditions. What types of policies are eligible? Almost any type, even some term or group insurance 1. Universal life policies and convertible term policies are especially popular. (Variable universal polices, however, are usually not eligible for legal reasons.) How can I find out if I am eligible? Simple call us at or Neil Porter at neil@iagroupllc.com. Fact: 88 percent of universal life insurance policies never pay a death benefit. Source: Milliman USA 1 Group life insurance benefits must be convertible to an individual policy or be able to be irrevocably assigned to be eligible for a life settlement. Consult your group life insurance policy to determine if your group life benefits can be converted or assigned. IAGLSA-ID-BROC 1.0 Page 4

5 YOUR BROKER Is it difficult to get offers for my policy? No. IAG Life Settlement Advisors can work for you as a life settlements broker to obtain offers from multiple sources. We do all the hard work. You just need to fill out our application package, and decide whether to accept any offers we receive. Do I have to accept an offer for my policy? Absolutely not. You can decline any and all offers you receive from us. You even have a short period after selling to refund your payment and get back your policy. How much does IAG Life Settlement Advisors charge? We don t get paid anything unless you actually decide to accept an offer. Once you sell, we are paid a commission by the buyer. We ll tell you exactly what that commission would be when we present you each offer. Why should I retain IAG Life Settlement Advisors to broker my policy? Every employee and affiliate of IAG Life Settlement Advisors is committed to offering our clients an experience that we feel is very different than what people have come to expect from the insurance industry. Too often, life insurance is marketed as a financial cure-all by agents focused on commissions, while clients struggle to make rational decisions in the absence of vital information. We are different. We pride ourselves on providing detailed information in plain English, so that you are never confused about your options. We are completely transparent in our operations. You will receive information about every offer we get for your policy, including the commission we are offered. And we will never pressure you to accept an offer. We believe that you, not we, should be in control of your financial life. THE PROCESS How does the life settlement process work? From your point of view, it s fairly simple. First, you should fill out our online eligibility calculator or call us to determine whether you are eligible. Second, you will need to fill out our application form and obtain a copy of your policy, both with our help. IAGLSA-ID-BROC 1.0 Page 5

6 Once we have your application, we will gather any medical records of the insured that we need to process the application. The insured may have to take a brief telephone interview regarding his or her health, but will rarely (if ever) be required to have a physical exam. (Remember, the insured cannot fail to qualify because of poor health worse health makes you more eligible for a life settlement.) Next, IAG Life Settlement Advisors will work with licensed life settlement providers (purchasers) to get the highest offer for your policy. This can take some time, but we do all the work. We will report offers to you as we get them, including our commission. You simply need to select the highest offer. If none of the offers are high enough to satisfy you, you can walk away with no obligation. If you accept an offer, we will help you fill out the closing agreement in which you sell your policy to the purchaser. Your payment will be placed in escrow. Once the purchaser receives your policy, the payment will be released from escrow into your bank account. At that point, that money is yours to do with as you please. If, however, you change your mind about the transaction, you will have a brief period to return the money and receive your policy back. As you can see, a life settlement is a very low-risk transaction. If we can t get you the offer you want, you can just say no. We won t charge you anything, and we won t hassle you about your decision. You literally have nothing to lose by calling us but you may lose thousands of dollars if you don t! A life settlement is easy Call Us Complete an application We find offers You choose the highest Close the transaction Use your new wealth as you please REASONS TO SELL What are common reasons for which people enter into a life settlement? The major reasons for settling a policy fall within the following categories: Changes in life circumstances New financial needs Inadequate policy performance Changes in financial or estate planning IAGLSA-ID-BROC 1.0 Page 6

7 What are some changes in life circumstances that could make a life settlement a good idea? According to surveys, almost 80 percent of life insurance is bought primarily for income protection. If your beneficiary no longer depends on your income, the life policy may be unneeded. One of the most common reasons that a life insurance policy may not serve your needs is that the beneficiary has died. Another common change in life circumstances is that your beneficiary has achieved financial independence and no longer needs the protection of life insurance. Financial Needs Sometimes satisfying an urgent financial need is more important than receiving a future death benefit. A life settlement can be a source of cash when you lack liquid assets. Life settlements are commonly used to pay for: Health care and long-term care costs Family emergencies Mortgages Debts owed by family members or businesses Inadequate Policy Performance Poor performance happens in the world of life insurance. If your premium payments are higher than you expected, or your cash value isn t growing as you anticipated, a life settlement will allow you to exit an inadequate policy with maximum return on the money you have already invested. Changes in Estate or Financial Planning Changes in tax laws, your estate plans, or your charitable giving goals can make even a good life policy inappropriate. A life settlement will turn your policy into a liquid asset by generating cash that you can use for any purpose. REASONS NOT TO SELL A life settlement is not a panacea. We believe that educated clients make good decisions, so we encourage you to think about reasons that a life settlement may not be appropriate in your personal situation. No Immediate Plans for Cash If you cannot formulate a definite plan for the proceeds of a life settlement, do not sell your policy. We will be there in the future if you change your mind! IAGLSA-ID-BROC 1.0 Page 7

8 Personal Circumstances Some personal circumstances provide strong reasons not to sell your policy. A leading reason that many people who apply for a life settlement decide not to accept an offer is that they discover they still need some insurance protection, but cannot obtain replacement insurance. No financial product is a true substitute for insurance. If you need insurance, make sure that you can get suitable replacement coverage before you sell your policy. You Prefer Other Alternatives A life settlement isn t the only way to deal with a policy that isn t meeting your needs, or that you can t afford. A number of alternatives exist beyond simply surrendering your policy. Consider policy loans, withdrawals, and premium financing as alternatives. If you need money due to medical circumstances, be sure to check your policy for provisions that may help. A life settlement may or may not be right for you. Consider consulting with your attorney or financial advisor to discuss the benefits and risks of a life settlement in your personal circumstances. HOW CAN I GET MORE INFORMATION? If you would like more information, call us at or Neil Porter at neil@iagroupllc.com. Whatever your questions or concerns, we ll do our best to answer them! IAG Life Settlement Advisors IAGLSA-ID-BROC 1.0 Page 8

9 IAG Life Settlement Advisors Qualifying Worksheet Name: Age & Sex: Date: Face Value: Cash Value: Premiums: Loans: Complete this worksheet to determine if a policy is a possible candidate for settlement. Unless the instructions specify otherwise, add the points from each question and look up the total on the Total Score table to determine the appropriate action. Age and sex Male age 64 or less / Female age 68 or less Male age / Female age Male age / Female age Male age / Female age Male age / Female age Male age 84+ / Female age 87+ Health Exceptional health for age Normal health for age Below average health with minor conditions Poor health with serious conditions Terminal illness Warning: Unlikely candidate unless in poor health 0 points 2 points 4 points 6 points 8 points 0 points 1 point 2 points 3 points Stop: Possible viatical settlement; call to discuss Note: Use lowest point value for second-to-die with both living. Policy Category Whole or Convertible Term Universal Variable Universal 2 points 3 points Stop: Cannot be settled through IAG Cash Surrender Value 50+% of face 0 points 30+% of face 1 point 20+% to 30% of face 2 points 10+% to 20% of face 3 points 10% of face or less 4 points IAGLSA-ID-BROC 1.0 Page 9

10 Qualifying Worksheet (cont d) Face Value Minus Outstanding Loans Less than $50,000 Stop: Cannot be settled $50,000 to $249,999 0 points $250,000 to $499,999 1 point $500,000 to $999,999 2 points $1,000, points Total Annual Premiums 4+% of face 0 point 3+% to 4% 1 point 2+% to 3% of face 2 points 1+% to 2% of face 3 points 1% of face or less, including disability waiver 4 points Total Score: Action 6 or less Settlement unlikely 7 to 11 Call IAG if there are unusual circumstances 12 to 18 Good candidate, please call for an application 19 or greater Exceptional! Please call for an application To discuss your score, please call IAG Life Settlement Advisors at or Neil Porter at neil@iagroupllc.com. IAGLSA-ID-BROC 1.0 Page 10