Genesis Living Benefits Services, LLC

Genesis Living Benefits Services, LLC - Life Settlements

 

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A REVOLUTIONARY NEW OPTION IN LIFE INSURANCE

Discover a valuable financial planning tool... Life Settlements

Circumstances change?
Life insurance policy no longer needed, wanted or affordable?
Want funds for medical needs today?
Need funds to purchase long-term care?
....

Genesis Living Benefits Services, LLC
P.O. Box 270358
St. Louis, MO  63127

PHONE
314.802.8422
FAX
314.802.8423

E-MAIL

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Frequently Asked Questions

What are “Life Settlements”?
Who would qualify for a Life Settlement?
What are some of the reasons why an Insured / Owner would consider selling their policy in the secondary market?
How do “Life Settlements” work?
What if the Seller changes their mind about selling their policy?
What if the Insured dies shortly after their policy is purchased?
After the policy is purchased, will the Insured be contacted by the Funder / Buyer?
What types of policies will Funders / Buyers consider purchasing?
Is “Ownership” of a policy an issue?
Taxes?



What are “Life Settlements”?

A “Life Settlement” is the actual sale of a life insurance policy, to a third party, preferably institutionally funded, for an amount greater than the cash surrender value but less than the death benefit.

Who would qualify for a Life Settlement?

Minimum age 65 or older; most viable candidates tend to be females 75 or older, males 72 or older. The health and life expectancy of the Insured are critical factors in determining the market value of their life insurance policy. Traditionally, the life expectancy of the Insured must be between 3 to 12 years. As the market matures, certain situations and factors may extend the determined life expectancy out to 20 years.
As appropriateness and consumer benefits are critical factors in determining viability of a settlement transaction, it is critical that the Planner conduct a planning session with their Client. The purpose of this meeting should be to assess insurance needs versus current coverage. It is also important to determine if existing contracts continue to meet the needs for which they were intended and if those policies are performing in accordance with the needs and expectations of the insured. If any or all of coverage is not meeting the performance expectations, then a life settlement transaction may be a suitable and viable consideration.

What are some of the reasons why an Insured / Owner would consider selling their policy in the secondary market?

· The premiums on the policy are no longer affordable.
· The beneficiary for whom the policy was originally purchased is now deceased or no longer has a need for the policy.
· A key-man policy, designed to protect a company from the financial loss of a key executive, is no longer necessary, either because the business has folded, been sold or the individual is no longer and integral part to the success of the business.
· The policyholder owns multiple life insurance policies and wishes to eliminate an expensive or under performing policy.
· The policyholder wishes to replace an individual policy with a survivorship policy, a Long Term Care insurance policy or create funds needed to pay for a Long Term Care policy.
· The policyholder requires funds to pay for medical expenses or for new and experimental treatments for himself / herself or someone close to them.
· The sale of the policy would allow the policyholder to maintain a desired standard of living and live out their final years with dignity.
· The policyholder wishes to remove the policy from a trust or estate.
· A reduction in the policyholder’s estate reduces the tax liability, which the life insurance policy was designed to provide for.
· An increase in the liquidity of the policyholder’s estate eliminates the need for the policy.

How do “Life Settlements” work?

The process begins with an application, which includes a HIPPA compliant release form, for medical information regarding the Insured, and a release form authorizing the insurance carrier to provide financial information about the life insurance policy to be sold. The Insured is not required to take a physical.

Once all of the medical information is collected, this information is sent to Life Expectancy Companies, for their review and analysis. The results of their studies will produce an anticipated life expectancy on the Insured.

The life expectancy report in addition to the financial information about the policy, is sent to a number of potential Funders / Buyers. The Funders / Buyers will analyze the information and if it satisfies their interest and buying parameters, an offer will be made to purchase the policy. All offers will be reviewed and typically, the highest offer is accepted and presented to the Seller. If the Seller accepts the offer, the Funder / Buyer is notified that their offer has been accepted. When the Funder / Buyer is notified that their offer has been accepted, they will deposit the Funds, to purchase the policy in escrow and forward the “Closing Documents” for completion.
The closing documents are very detailed and address all aspects of the sale and purchase of the life insurance policy. Included with the closing documents are, change of ownership and change of beneficiary forms from the insuring carrier.

When the Funder / Buyer are notified that the ownership and beneficiary changes have been approved and registered by the insurance carrier, the escrow agent is authorized to release the funds to the Seller by a wire transfer or a cashiers check, within three business days.

What if the Seller changes their mind about selling their policy?

If the Seller changes their mind about selling their policy, they can cancel the life settlement contract for any reason whatsoever, up to a certain period of time after you receive the funds from the Funder / Buyer. The time period will vary from state to state and ranges from seven (7) to potentially thirty (30) days. The guidelines for the rescission period will be explained in detail in the, “Life Settlement Purchase & Sale Agreement”, closing documents. The most commonly used rescission period is fifteen (15) calendar days.

What if the Insured dies shortly after their policy is purchased?

If the Insured dies, at any time up to the 15th day after they have received the funds from the Funder / Buyer, the settlement contract will automatically cancel. The provider will pay the owner of the policy or beneficiaries designated by the owner in the life settlement contract any proceeds it receives from the policy, minus any money already paid for the purchase of the policy and any premiums it paid to the insurance company to keep the policy current.

After the policy is purchased, will the Insured be contacted by the Funder / Buyer?

Typically, the Insured will appoint a primary and a secondary designee as the individuals whom the Funder / Buyer may contact and inquire about the Insured’s health status. The primary designee, in most instances, must agree to this designation with their signature in the closing documents. The primary or secondary designee may be contacted periodically during the year, usually no more than once quarterly.

What types of policies will Funders / Buyers consider purchasing?

Funders / Buyers will consider purchasing all types of policies. For example:
Universal Life
Term Insurance (Must be convertible)
Whole Life
Variable Life
Variable Universal Life
Second to Die

Is “Ownership” of a policy an issue?

Ownership is not an issue. The policy can be owned by an,

· Individual 
· Corporation 
· Trust (Revocable or Irrevocable)
· Charity

Taxes?

We highly recommend that all Clients consult with their tax professionals to determine their specific tax liabilities. There are generally three tiers of proceeds from settlements. Proceeds received up to the cost basis in the policy, (premiums paid) are treated as a return of capital and are not taxed. If the cash surrender value is greater than the cost basis, then the proceeds received equaling the difference between the cash-surrender value and basis are generally treated as ordinary income, just as they would if the policy were surrendered to the insurance company. Settlement proceeds above the cash surrender value are typically treated as capital gains.




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