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Sale Of A Life Insurance Policy (Viatical, Life And Senior Settlements)


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If you have been diagnosed with a serious or life-changing condition, you may be able to obtain cash by selling your life insurance to companies that are not related to life insurance companies. The sale can occur either as a "viatical settlement" or a "life settlement" (which is also known as a "senior settlement.")

A viatical settlement involves the sale of a life insurance policy by someone with a short life expectancy. Age is not a factor in a viatical settlement.

In theory, a life settlement is the sale of a life insurance policy on the life of an insured who is age 60 or older. In reality, purchasers of life settlements also require that the insured has a limited life expectancy of 12 -- 14 years or less.

When considering whether or not to sell a life insurance policy, it is preferable to understand how a sale works and what it means to you -- including possible tax consequences.

While a viatical or life/senior settlement can be very beneficial, the sale process can sometimes be complicated. You can either go through the process yourself  or use a broker.

  • If you do the process yourself, it is advisable to contact at least two purchasing companies. You will have to go through an interview, supply documentation and then compare offers.
  • A broker will contact several settlement companies for you and do the work in exchange for a percentage of the proceeds. According to the NY Times, the commission in 2017 can be up to 30% of the price a company offers. 

As of 2017, 43 states have adopted life-settlement regulations, usually requiring that companies be licensed and make consumer disclosures.

For additional information, see: 

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