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The Five Questions to Ask Before Accepting a Life Settlement Offer
By Saul L. Appel, CLU®, ChFC®
A life settlement offer can be valuable, but the largest number on the page does not tell the entire story. Before accepting, ask these five questions:
- How does the offer compare with the cash surrender value? The owner should know what the carrier would pay if the policy were surrendered.
- Was the policy presented to appropriate qualified buyers? Market interest varies, and competition may improve the result when multiple buyers are available.
- What will I give up? After the sale, the buyer becomes the owner and beneficiary, and the current beneficiaries lose the sold death benefit.
- What are the taxes and benefit consequences? A CPA should review possible taxes, and anyone receiving means-tested benefits should obtain appropriate legal advice.
- What are my alternatives? Keeping the policy, reducing the death benefit, changing premiums, taking a loan, using an accelerated benefit, or surrendering the coverage may also be possible.
Also ask who represents you, how that professional is compensated, how medical information will be protected, what closing conditions apply, and whether state law provides a rescission period.
Do not allow an urgent premium notice to force a blind decision. Keep the policy in force while the options are evaluated, and obtain a current in-force illustration whenever possible.
For an independent, confidential review before you accept an offer, visit Policy-Cash.com.
Saul L. Appel, CLU®, ChFC® | President, Appel Financial, Inc. | 50+ years experience