As time goes on, your needs may change. It’s not uncommon for a policy of the past to no longer suit your needs. At Flah & Company, we offer policy reselling, making it an easy process for you.
Why Do People Resell Insurance Policies?
As time goes on, your needs may change. It’s not uncommon for a policy of the past to no longer suit your needs. At Flah & Company, we offer policy reselling, making it an easy process for you.
There are several reasons that people may want to resell their insurance policy. Other reasons they may opt to resell include:
- Business insurance is no longer needed, i.e. buy-sell, key person, group term
- Successful estate planning has shifted assets elsewhere
- Survivorship insurance is now more suitable
- Premiums are no longer affordable
- Policy ownership needs to be restructured, e.g. irrevocable trust is obsolete
- A new policy provides more attractive economics
- Term insurance is no longer needed
- Fiduciary has a duty to ensure highest “fair market value” inures to beneficiaries
What is a Cash Surrender?
In the past, the only option for those looking to sell a policy was to surrender it for its “cash surrender value.” In this case, the only “buyer” was the carrier, not accounting for health changes. There are several financial institutions that are willing to pay sellers a multiple of their cash surrender value when they see an attractive investment.
What is a Desirable?
When selling an insurance policy, there are more desirable situations than others. A desirable may be:
- Face amount between $250,000 and $20,000,000
- At least two years old and is not assigned or otherwise encumbered
- The insured’s health has declined since the policy was issued
- Ongoing premiums are less than 4% of the face amount
- Small or no policy loan exists
- The insured is generally over age 70, with a life expectancy less than a dozen years.
When Should I Sell My Insurance Policy?
You deserve the best sale price for your policy. This happens when there is competition with multiple potential buyers bidding on a policy in auction. At Flah & Company, we offer clients a nation-wide team of experts to provide your policy with attention-to-detail.
How Does Flah & Company Handle Policy Resale?
Our team is dedicated to our transparent process. We guide you through every step of the way, working to get you the best life settlement possible.
Flah and Company Life Settlement Mandates
- Completion of an engagement agreement detailing the scope of the project
- Confirmation that all parties to the transaction are properly licensed and appointed to do business in the state
- Due diligence on each funder invited to bid
- Written responses from at least five funders in good standing, unless fewer licensed funders exist in that state
- Complete transparency and disclosure to the policy owner
- A review of the winning bidder’s closing document package
Flah and Company Life Settlement Process
- Upon discovery, we discuss objectives and assess feasibility
- Agree on “guardrails” and execute engagement agreement
- Gather all relevant medical records and enforce policy data
- Submit medical records to life expectancy (LE) providers to establish LE Concurrently, examine policy pricing structure and terms
- Send complete package to funders to begin auction process
- Review and compare bids; negotiate final offers
- Reassess viability – Should you sell, keep, surrender or exchange?
- Confirm documents are in keeping with “guardrails” previously established
- Prepare summary & disclosure statement with complete bid history
- Counsel reviews closing document package
- Execute documents and place funds in escrow
- Insurer changes owner and beneficiary
- Funds are released to seller
What If I am an Investor?
If you are an investor, be sure to consult with your professional advisor. Life settlement transactions should be analyzed through for potential tax, estate, and legal considerations that may arise upon entering. Proceeds may be open to federal and/or state taxes, as well as claims from creditors and impact government benefits.
Additionally, the circumstances of the purchaser may impact the sale of policy. Conditions may include but are not limited to life expectancy, future premiums, death benefit, the policy’s terms, and state of the current market. There may also be fees due with the sale of a life settlement.
What If I am an Investor?
Don’t let the detail inundate you. Our experts at Flah & Company are here to make the process as seamless as possible. So, contact us today to learn more about your policy resale options.
