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The Settlement Application and process
Every life settlement has its own DNA
A settlement begins with the policyowner applying with a written and signed application, verifying to his or her intent to willingly enter into a settlement arrangement and authorizing the release of information regarding the insured’s health and the coverage in effect. This information is needed for the buyer—a settlement provider—to assess the policy and offer a price. If the policyowner is working with a broker, the broker has the duty to act in the owner’s best interest and will “shop” the policy among different providers for the best price and terms.
Once a settlement provider is identified, its role is to evaluate the insured’s medical condition and life expectancy in light of its underwriting guidelines, ensure that the terms of the policy do not preclude a sale or assignment, and then determine the price for the policy. The price will be based on a number of variables such as:
⦁ the policy’s death benefit amount
⦁ the insured’s projected life expectancy
⦁ the type of policy—traditional whole life, universal life, or term
⦁ the insurance company’s rating
⦁ the premiums needed to keep the policy in force
The application provider must also obtain a document in which the insured consents to the release of his or her medical records to the provider.
A settlement begins with the policyowner applying with a written and signed application, verifying to his or her intent to willingly enter into a settlement arrangement and authorizing the release of information regarding the insured’s health and the coverage in effect. This information is needed for the buyer—a settlement provider—to assess the policy and offer a price. If the policyowner is working with a broker, the broker has the duty to act in the owner’s best interest and will “shop” the policy among different providers for the best price and terms.
Once a settlement provider is identified, its role is to evaluate the insured’s medical condition and life expectancy in light of its underwriting guidelines, ensure that the terms of the policy do not preclude a sale or assignment, and then determine the price for the policy. The price will be based on a number of variables such as:
⦁ the policy’s death benefit amount
⦁ the insured’s projected life expectancy
⦁ the type of policy—traditional whole life, universal life, or term
⦁ the insurance company’s rating
⦁ the premiums needed to keep the policy in force
The application provider must also obtain a document in which the insured consents to the release of his or her medical records to the provider.
The Settlement Agreement
If the policyowner accepts the provider’s purchase price and offer to buy, a written settlement contract must be signed, which effects the assignment and transfer of the policy from the owner. If the owner is not the policy insured, the insured will also be required to sign the settlement contract.
Points the settlement contract will specify:
⦁ the price to be paid for the policy
⦁ the terms and conditions of the sale
⦁ disclosures that must be made to the owner (including the right to rescind the sale)
⦁ the ongoing contact that the provider may have with the insured to monitor his or her health and to maintain current contact information
If the policyowner accepts the provider’s purchase price and offer to buy, a written settlement contract must be signed, which effects the assignment and transfer of the policy from the owner. If the owner is not the policy insured, the insured will also be required to sign the settlement contract.
Points the settlement contract will specify:
⦁ the price to be paid for the policy
⦁ the terms and conditions of the sale
⦁ disclosures that must be made to the owner (including the right to rescind the sale)
⦁ the ongoing contact that the provider may have with the insured to monitor his or her health and to maintain current contact information
Escrow
Most states require that a settlement agreement be closed in escrow. The role of the escrow agent is to receive, hold, and then dispense the documents associated with the sale as well as the funds the provider paid to purchase the policy. Once the settlement contract and the assignment and change of beneficiary forms are signed by the owner and received by the escrow agent, the settlement provider must deposit the purchase funds with the escrow agent. Upon receipt of these funds, the escrow agent will release the settlement forms to the settlement provider. The provider will complete the ownership assignment and change of beneficiary forms to indicate the new owner and new beneficiary and will then forward these forms to the insurance company. Upon receiving notice that the insurance company has accepted and recorded the new policy ownership and beneficiary changes, the escrow agent releases the settlement proceeds to the viator or settlor.
After a settlement has concluded, the settlement provider as the new owner is responsible for the ongoing payment monitor the insured’s health and upon the insured’s death, will submit the claim to the insurance company and compute and distribute proportionate shares of the death benefit to the policy investors of premiums.
Most states require that a settlement agreement be closed in escrow. The role of the escrow agent is to receive, hold, and then dispense the documents associated with the sale as well as the funds the provider paid to purchase the policy. Once the settlement contract and the assignment and change of beneficiary forms are signed by the owner and received by the escrow agent, the settlement provider must deposit the purchase funds with the escrow agent. Upon receipt of these funds, the escrow agent will release the settlement forms to the settlement provider. The provider will complete the ownership assignment and change of beneficiary forms to indicate the new owner and new beneficiary and will then forward these forms to the insurance company. Upon receiving notice that the insurance company has accepted and recorded the new policy ownership and beneficiary changes, the escrow agent releases the settlement proceeds to the viator or settlor.
After a settlement has concluded, the settlement provider as the new owner is responsible for the ongoing payment monitor the insured’s health and upon the insured’s death, will submit the claim to the insurance company and compute and distribute proportionate shares of the death benefit to the policy investors of premiums.
Timeframe
From application to money deposited into seller’s account, the process can take from 6 -12 weeks. Each settlement is unique with issues and regulatory requirement.
Last though not least, a life settlement is a no-lose situation. There is no out of pocket expense to receiving a fair market offer and true value of your policy that you can either accept or reject.
If you are interested, the next step is to call me at 505-702-3699 to do an application over the phone that will take less than ten minutes of your time. It’s that easy. You have nothing to lose and everything to gain.
Best regards,
Joyce
Licensed Life Settlement Specialist
BIDWELL LIFE SETTLEMENTS
Guiding Seniors to Peace of Mind
505-702-3699 ---- Direct Line
joyce@bidwelllifesettlements.com
bidwelllifesettlements.com
From application to money deposited into seller’s account, the process can take from 6 -12 weeks. Each settlement is unique with issues and regulatory requirement.
Last though not least, a life settlement is a no-lose situation. There is no out of pocket expense to receiving a fair market offer and true value of your policy that you can either accept or reject.
If you are interested, the next step is to call me at 505-702-3699 to do an application over the phone that will take less than ten minutes of your time. It’s that easy. You have nothing to lose and everything to gain.
Best regards,
Joyce
Licensed Life Settlement Specialist
BIDWELL LIFE SETTLEMENTS
Guiding Seniors to Peace of Mind
505-702-3699 ---- Direct Line
joyce@bidwelllifesettlements.com
bidwelllifesettlements.com