Investment Opportunities – Life Settlements

For my internship at QFA, I am researching on life settlements. Life settlements market is still in development.

What is life settlement? Life settlement is sale or transfer of an insurance policy in lieu of cash. The beneficiary then is the life settlement company – the new owner of the policy. The money paid to the original policy holder is usually higher than the surrender value of the insurance policy.

I have performed an intense research on the topic and will continue to do so as a part of my internship with other learnings but following are some of the basic points about life settlements that I’d like to share here today:

  • Proceeds are Taxable – Should always consult a tax advisor prior to selling the policy
  • Almost any type of life insurance policy is acceptable – Universal, whole, term, Keynes, Survivorship, etc
  • The process can be anywhere between 2 to 6 weeks long
  • Eligibility : Anyone 65 or over, a policy with a face amount of $50,000 or more and an assignable policy or a policy outside of the contestable period.

Don’t viatical firms do the same? The big difference between a viatical firm and a life settlement company is that viatical firms target people with life threatening conditions.

This market is yet to be at a fully developed stage.


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