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Senior Life Settlement: Frequently Asked Questions
| What Is A Senior Life Settlement? |
| A Senior Life Settlement is the transfer of ownership and beneficiary of an unwanted or unneeded life insurance policy by a senior, over the age of 65, for a cash payment greater than the policy's cash surrender value. The policy owner transfers ownership rights to the provider for payment. The purchaser then becomes the policy owner and beneficiary, and is responsible for future premium payments.
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| When Is A Policy Considered For A Senior Life Settlement? |
Generally, a life insurance policy has value in the institutional secondary market for senior life settlements if:
- The insured is over the age of 65
- The insured has experienced a decline in health since issuance
- The insured has a life expectancy of 15 years or less
- The policy has a face amount of $100,000 or more and the policy is beyond the 2-year contestable period
If you and your policy meet these general requirements, please submit a Senior Life Settlement Qualifying Worksheet for a no-cost review. You may call us toll-free at (877)591-6102 or email us at info@ptfin.com.
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| Why Would I Sell A Life Insurance Policy? |
| A life insurance policy is an asset with a value. Due to changes in circumstances, it may not make financial sense to continue to pay premiums on an existing policy. A senior life settlement from P & T Financial maximizes the value of your asset by selling your policy in the dynamic institutional investor marketplace. Instead of simply letting a policy lapse by not paying premiums, or settling for the cash value of a policy, a senior life settlement will often return 4-5 times the cash value.
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| Who Buys Life Insurance Policies? |
| Life insurance policies can be sold in a secondary market, just like the real estate market. The buyers are large institutional funds and high net worth individuals.
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| How Does A Senior Settlement Work? |
Typically, the process to earn a Senior Life Settlement is as follows:
- The policy owner or professional financial advisor submits an evaluation form with a signed application
- P & T Financial obtains all necessary documentation such as an Attending Physician's Statement, Policy Illustrations, etc.
- A Senior Life Settlement offer is submitted for acceptance
- If accepted, a contract is sent for signatures
- Change of ownership is completed and funds are released to the previous owner
At P & T Financial, we have a streamlined system to evaluate policies, stay in close communication with you regarding the status of your application, and work to promptly fund each policy accepted. For complete information, go to Senior Life Settlements--Our Process.
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| What Are The Tax Implications Of A Senior Life Settlement? |
Tax implications will vary, but this example can help demonstrate a typical situation:
A Senior Life Settlement of $250,000 is received by the former policy owner. The policy had a $70,000 cash surrender value and a cost basis of $50,000. The $180,000 difference between the Senior Life Settlement and cash surrender value is taxed as a capital gain. The $20,000 difference between the surrender value and the cost basis is taxed as ordinary income.
P & T Financial suggests you consult a tax professional when considering a financial strategy such as a senior life settlement.
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| Is It Legal To Sell A Life Insurance Policy? |
| Yes. The sale of a life insurance policy is regulated in most states and requires the involvement of a broker. The broker is legally obligated to seek the highest price for a policy. P & T Financial will submit each policy to a minimum of 35 institutional investors in order to get the most competitive funding for the policy.
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P & T Financial has expertise in senior life settlements in California, including San Diego, Irvine, Santa Ana, Long Beach, Riverside, Los Angeles, Santa Barbara,Bakersfield, Fresno, Modesto, Sacramento, Stockton, San Francisco, San Jose, Oakland and Redding geographic markets.
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