Life Insurance Settlements


You probably know the fair market value of your largest assets and financial holdings, such as your home, other real estate, automobiles, boats, recreational vehicles, stocks, bonds, and retirement accounts. But do you know the real fair market value of your life insurance policy?

You should…because your policy may be worth much more than you realize and may offer you unexpected opportunities.

How do Fair Market Value and Cash Surrender Value differ?
An industry study, conducted at the University of Pennsylvania’s Wharton Business School, found that life insurance policies sold in the secondary market for an average of 3.6 times the policy’s (cash) surrender value. This means that there may be a significant difference between cash surrender value and fair market value for your policy.

What is a Life Settlement?
A life settlement is an insurance policy sold by the owner─typically the insured or a trust─for more than the surrender value but less than the face amount of the policy. The purchaser of the life settlement becomes the new policy owner and beneficiary, is responsible for making future premium payments, and collects the death benefit of the insured.

A life settlement enables older individuals, businesses, and other organizations to sell life insurance policies they currently own─but no longer want or need─for an amount greater than the cash surrender value. Even some term life insurance policies with a conversion option to permanent coverage may qualify for a life settlement. A life insurance settlement can be an ideal way to free up cash to help the elderly remain in their home, to pay for medical and long term care expenses, to help fund a child’s education, or to pay bills.

What kinds of policies qualify for a Life Settlement?
Many types of insurance policies qualify for life settlement transactions: whole life, variable or universal life, any type of survivorship life, adjustable life, joint first to die, convertible group, and term life with conversion option.

Who can qualify for a Life Settlement?
Lifetime Settlements are for people who have a life expectancy of 3 years or more but usually less than 12 – 15 years. As a general rule, anyone over the age of 65 could be a candidate, though people age 70-75 will generally get a higher price due to a shorter life expectancy.

Why consider selling an insurance policy?
Life insurance policies can help address a wide range of financial goals, from paying estate taxes and covering survivor needs to protecting against various business risks. Over time, circumstances change and policies may become outdated, inefficient, or unneeded. Rather than surrendering a policy for its cash value or letting it lapse, you may want to consider a Life Settlement for many reasons.

Personal opportunities

  • The policy premiums have become unaffordable, and the policy is in danger of lapsing.
  • Liquefying the policy would allow you to fund new, more cost-effective life insurance coverage, if there have been no adverse changes in health.
  • The life insurance policy is a dormant asset that you can liquefy for supplemental income.
  • The beneficiary has changed because of death or divorce.
  • Estate-planning needs of the insured have changed significantly.
  • Funds are needed for long-term health care.
  • The insured has become terminally ill and needs cash to pay bills and expenses.
  • You want to fund new annuities, life insurance, or investments.
  • You want to make cash gifts to other family members.

Business opportunities

  • “Key-man” insurance or other business-owned insurance is no longer needed.
  • The company has been sold to a third party and the policy’s original purpose was to
    fund a buy/sell agreement upon one partner’s death.
  • The policy is part of litigation among partners.
  • The company needs to sell assets to raise cash.
  • The policy was purchased to fund deferred compensation or other benefit programs that
    have changed.
  • There is an opportunity to purchase an interest in another enterprise.
  • Liquefying funds would facilitate the transfer of a business to the next generation.
  • Funds are needed to repay debt.
  • Funds are needed to buy back stock from a partner or shareholder.

How is the fair market value determined?
When you contact ProActive Capital Funding, we arrange for a professional policy valuation.  A life insurance valuation should involve no out-of-pocket expenses, no medical exam, and no obligation to sell the policy before, during, or after the valuation is performed. You can launch the life settlement valuation process by completing a simple quote form. We provide all necessary paperwork, cover all related costs, extend E&O coverage to the advisor (per transaction), and return multiple offers for each policy submitted.

For additional information, contact:

Ray King <> The ProCoach
Phone: 832-615-9124 * Fax: 832-615-9570