What You Need to Know Before You Meet with the Life Settlement Company

Medical Condition, Terminal Illness? Do Research Before Selling Life Insurance
Do you have a life insurance policy and have considered cashing out or
a life settlement? If you have a severe medical condition, terminal
illness or are facing your later years in life you may have considered
such options as life settlements or viatical settlements.
Understanding what is the best option for you starts with research.

Knowing What and Who You Need for the Life Settlement is Key

Life settlements have come under a lot of scrutiny in the news lately
and it is because they are becoming more popular than ever. But, with
more popularity there is the potential of scammers and con-artists.
Life settlements are very intricate transactions and need to be taken
care of by trusted professionals. Knowing what you want and who you
want to do it is key in making sure your life settlement transaction
is done correctly.

Understand the Life Settlement Terms

First, you need to understand what a life settlement is and then
decide if it is right for you.
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Before we go further, let's understand the terms:

* Life Insurance "Cash-Out or Cash Surrender Value": This is the
amount someone would receive if they went to their life insurance
company and told them that they decided they did not want their life
insurance anymore. They would get a cash value that would be
significantly lower than the face value and much lower than other
options such as a life settlement or viatical settlement.

* Life Settlement: This is a common choice among senior citizens
or people who have a medical condition that will likely result in a
shortened life expectancy. With a life settlement one would get a
pay-out lower than the face value of the policy but higher than the
cash surrender value. The policy holder receives the money by selling
their insurance policy to a life settlement company and then when the
insured dies the life settlement company will receive the benefits
rather than the insureds original beneficiaries (such as their spouse
or children).

* Viatical Settlements: These are similar to the above life
settlements but are for persons who have a catastrophic or
life-threatening illness or condition (such as terminal cancer or
AIDS). Just like life settlements, with a viatical settlement the
policy holder would get a cash value generally higher than the
surrender value but still lower than the face value. And again, the
policy is sold to a viatical settlement company who then becomes the
beneficiary of the life insurance policy.

Do You Really Want or Need a Life Settlement?

If you have considered these options, you need to take the time to
research your needs and select a trusted company to handle the
transaction you have chosen. When researching your needs remember, the
above choices are for people who have beneficiaries who do not need
the life insurance money anymore. If your beneficiaries will still
need to be cared for financially you probably should not be
considering these options. Instead, if you have financial obligations
now, consider a loan. Your beneficiaries can pay back the loan with
the life insurance money and still have some left for other financial
obligations when you are gone. Also make sure you talk with your
children or other close relatives as to why you are considering
selling your life insurance policies and let them be involved in the
process of helping you make the decision and finding a reputable life
settlement company.

Research Tips for Finding a Trustworthy Life Settlement Company

If you have looked at your needs and decided that a life settlement or
viatical settlement is right for you, it is time to do some research.
Here are some tips to help you find a trustworthy and reputable
company to handle your life settlement:

1. Contact as many life settlement or viatical settlement companies
you can find. There is no "standard" pay-out rate so you will want to
get an idea of the average pay-out you would get for your particular
policy. If one company seems to be offering an extremely high pay-out
for your life insurance policy then beware of them. They may be just
trying to get you "hooked" and then they add a lot of loopholes that
end up making your payment smaller.

2. Make sure the settlement company is licensed. If your state does
not require licensing then check the company's history and financial
standing before doing business with them.

3. Be familiar with what "decision period" you have. After you make a
decision and sign the papers your state has a law that offers a time
frame in which you can still change your mind.

4. Understand fully the tax consequences of your decision. For this,
consult a tax professional or an accountant, not the settlement
company.

5. Make sure you are not alone in dealing with the settlement company.
Use a trusted spouse, child, or close family member through the whole
process. It is much harder to scam two people than one (although it
has been done so again, do your research!)