Life Settlements can come in different forms. Not all States or cases will necessarily allow for any particular type of life settlement. Usually the seller of a policy determines which type of life settlement is the best solution for their circumstances. For informational purposes here are the most common types of life settlement transactions.
Traditional Life Settlement – In a Traditional life settlement, the licensed life settlement provider (aka buyer) will pay the policy owner a cash settlement amount above the surrender value and below the death benefit. The premiums will be paid by the buyer or its financing entities for the remainder of the life of the insured. In this type of life settlement the seller received all their benefit from the policy at the time of settlement and will receive nothing at the death of the insured.
Retained Death Benefit – In this option the licensed life settlement provider or its financing entities will take over only the premiums of the policy for the seller. The seller will receive no cash now. The policy beneficiaries will be assigned a retained death benefit amount directly at the insurance carrier which will be paid at the death of the insured. This amount is usually much more than traditional Life Settlements. The original owner will no longer be required to pay the premiums but will receive a portion of the death benefit from the insurance carrier at the insured’s death.
Hybrid Life Settlement – In this option the sellers of the policy can receive a combination of traditional life settlement and retained death benefit. This can provide some needed cash now and retain some death benefit for the family or trust.
When a Policy Seller, Agent or Broker submits a policy to us for purchase, it is always very helpful to know which type of life settlement would be the best solution for the insured and policy owner. Please be sure to inform your Abacus Life Settlement representative. 1-800-561-4148