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Settlement Strategies

Straight Settlement

A Straight Settlement is the sale of an existing life insurance policy where proceeds are not tied to purchasing another financial product. The seller determines the policy is no longer needed, and desires cash in exchange for the policy. The proceeds may be used for whatever purpose the seller chooses. In this instance a settlement offers an alternative to surrendering the policy for its cash value or letting the policy lapse. A settlement may return a significant increase to the seller over surrendering the policy.

Settlement Exchange Program

The Settlement Exchange Program uses the proceeds from a life settlement to fund a new policy purchase. The new policy is not limited to life insurance and can include long-term disability, long term care insurance or an annuity. A settlement offers an alternative to a 1035 exchange since the settlement proceeds can potentially be far greater than the cash value of the existing insurance. Or a seller may choose to replace an under performing policy with a more efficient up–to-date policy.

Percentage Placement

In a Percentage Placement transaction the insured can sell a portion of an existing policy. The balance of the policy is retained for the policy beneficiaries. A Percentage Placement transaction can be combined with an Exchange Program by selling a portion of an existing policy to pay the balance of the policy retained. The Percentage Placement represents a good option in situations where there is a need for life insurance coverage tied to a need for cash.

Group Applications

For individuals who may be suffering from a chronic or terminal illness and are covered by a group life plan, an absolute assignment can create individual value from the group life insurance. By assigning the beneficial rights of the policy to a buyer, the insured can create value from an often under utilized asset: their group life. These transactions are at no cost to either the employer or the employee.