How Life Settlements Work
The Process of doing a Life Settlement can seem confusing to someone who has never completed a life settlement transaction.
The steps involved in the process are generally the same with all life settlement companies. To learn how life settlements work we will demonstrate the steps involved by breaking them up into 6 key phases.
1. Offer
2. Acceptance
3. Contracting
4. Verification
5. Ownership Change
6. Funding
The first step is to get an offer or amount that a licensed buyer will pay for the life insurance policy. The buyer must be licensed in the State in which the owner of the policy resides.
If the amount offered by the licensed buyer is acceptable to the policy seller then the owner will accept the offer and request the required documents for review.
At this time the licensed life settlement buyer generates State-approved Life Settlement contracting documents. These documents are utilized to document the life settlement transaction as well as spell out the agreement between the seller and purchaser. Both parties must sign and notarize the life settlement contracts.
Once the contracts are executed and all required accompanying documents have been received, the verification process begins. Often completed by a third party like a law firm, this third-party verification agent will check that all the contracting documents have been completed properly. They may also check that the policy is in full force and good standing with the insurance company. They may also verify that the funds for the purchase have been put in an escrow account for the policy seller.
Once the verification process has concluded, then an ownership change will be sent to the insurance carrier effectively requesting that the owner is changed from the seller’s name to the purchaser’s name or an entity that the purchaser names as owner such as the financing entity.
Once the insurance carrier has confirmed that the purchaser is listed as the owner, the escrow agent is instructed to release the funds for the purchase to the seller. The new owner is now responsible for all premiums going forward.
This concludes the Life Settlement purchase transaction.
What is the next step?
The next step is to qualify your life settlement by answering a couple simple questions about the policy and the insured’s health. Please call us with any questions at (800) 561-4148.
