Life Insurance Settlements 

At Alan Kaye Insurance Agency, Inc., our only focus is our clients and maximizing the value of their life insurance settlements. While some companies claim to offer direct-to-client services with no commissions that will reduce the value a seller receives, we have consistently achieved the best financial settlements for our clients by delivering personalized service, creative planning, and strategic marketing. Our focus keeps our clients in mind throughout and offers full disclosure at every step, so you know exactly what companies are offering to purchase your policy. We believe that each transaction should be a win-win situation for everyone involved, and this focus consistently brings us repeat customers.

What is Life Insurance Settlement?

If you are older or dealing with a severe health condition, you may be able to sell your life insurance policy for significantly more than its cash surrender value. Life insurance settlements (also referred to as Life Settlements and Viatical Settlements) are an important planning tool for people who no longer need or are willing or able to continue paying for their insurance policy premiums. It is a process to sell their policy to a third party for cash during your lifetime. Some people choose to sell the policy in exchange for their heirs to be an irrevocable beneficiary for part of the death benefit without additional premium payments.

The sale of a life insurance policy can be an untapped potential source of cash for anyone who may no longer need life insurance and has other immediate financial needs.

Before completing a Life Settlement, it is important to understand that if a policy is a good deal to sell, it must be a better deal to keep! The only reason a company is going to offer to buy your policy is that they believe they can pay you and pay the premiums and still expect to make 12-14% on their money. You already own the policy, so your return should be larger than any buyer since you only need make the premium payments.

The financial advantage a Life Settlement company has over you is that they are buying thousands of policies, so they don't care if one person lives too long since they know that someone else will die sooner than expected, and they will make money on average. You only have your own life to count on, and if you live too long, the policy can cost a lot of money!

Life insurance vs. Viatical settlements

Life Settlements and Viatical Settlements grew out of the AIDS epidemic. The number of people dying from AIDS and living in poverty due to their tremendous medical expenses brought about a humanitarian solution…buy the insurance proceeds at a discount and give these people an advance on their life insurance proceeds so they can live with dignity!  Private companies also began buying policies and the Viatical Settlement industry was born. The insurance companies and government got involved too so that the proceeds could be paid income tax-free as an advance against the death benefit.

If the insured's life expectancy is shorter than 2 years, the policy sale is considered a Viatical Settlement, and the proceeds are income tax-free. However, if your expectancy is longer, it is technically a Life Insurance Settlement, and your taxable gain is calculated from the difference between your cost basis and the net settlement proceeds.*

Should you invest in life settlements?

We don't advise our clients to invest in Life Settlements with companies selling small groups of policies to investors. The secret of the life insurance business is the "spread of risk." This is accomplished by working with a large enough group that the investor has the statistical probability of knowing its risks.

Investors buying into a small group of policies is gambling, in our opinion. Furthermore, investors are likely buying policies that the professionals (who are paying wholesale prices to purchase policies) do not want to buy or are selling to you at a higher price.

Contact us whenever you have any issues concerning life insurance settlements in Beverly Hills.

Tax Advisors and Other Considerations

Alan Kaye Insurance Agency does not give tax advice, and you should speak with your own tax professional before completing a Life Insurance Settlement. Please note that the number of bidders for a policy may be limited and the proceeds from sales of similar policies may vary and may be subject to claims of creditors. Receipt of proceeds may impact eligibility for government benefits and entitlements. Before the sale, the insured should consider the continued need for coverage, impact on estate plans, availability of insurance, costs of comparable coverage, and tax implications. There may be high fees associated with the sale of a life settlement, and your personal medical information may be disclosed to 3rd parties. Please consult us about your individual circumstances.

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