What is a Life Settlement and how do they work? A Life Settlement is simply selling an unwanted Life Insurance policy to another party.
While that might seem overly simplified, a Life Insurance policy is simply another asset you own, much like a car or home. Life Insurance can be very complicated for most consumers lacking an insurance background. Insurance companies thrive by creating confusing products for consumers which generate significant profits. Most life insurance owners have no idea a Life Settlement is available because most insurance companies fail to promote this benefit.
Each year, many thousands of policy owners surrender life insurance without considering a Life Settlement. Many times a Life Settlement can provide more cash than the policy’s cash surrender value especially for individuals with health issues. 14 states now require Life Insurance companies provide notice to policy owners that Life Settlement is an option.
Life Settlements Defined in More Detail!
Are Life Settlements Legal?
One of the first question most ask about a Life Settlement is if the process is legal. Not to worry, The United States Supreme Court ruled in 1911 that Life Insurance is an asset owned by an individual.
In 1911, John C. Burchard needed a surgical procedure without the ability to cover the operation’s cost. Dr. A.H. Grigsby agreed to cover the procedure agreeing to purchase Mr. Burchard’s Life Insurance policy to help cover payment. Upon Mr. Burchard’s passing, the insurance company challenged Mr. Burchard’s Life Settlement. The case reached the United States Supreme Court where Justice Oliver Wendell Holmes, Jr declared that Life Insurance is an asset.
Justice Holmes’ ruling established legal fact that Life Insurance is in fact personal property or an asset to the policy owner. Additionally, in 1996, the Health Insurance Portability and Accountability Act (HIPAA) signed into law by President Clinton also supported the sale of an existing Life Insurance policy to a third party.
How Life Settlements work?
SettlementDirect has simplified the Life Settlement process by streamlining both underwriting and policy review processes through automation and technical capabilities.
Policy Evaluations as part of a Life Settlement:
Life Settlement provides the opportunity to sell a highly valuable asset for cash. The first step to determine if a Life Settlement is right for you is requires an evaluating the Life Insurance policy and insurance company in detail.
Life Settlement Medical Evaluations:
Beyond simply reviewing the life insurance policy, a Life Settlement requires an evaluation of the insured’s medical condition. While an evaluation of the insured’s medical condition is needed in a Life Settlement, there are typically no medical exams needed.