Broker Check

When should corporations consider lifetime settlements?

Your business may own a life insurance policy that no longer plays its intended role, or one that is under-performing, or one that has become noncompetitive. Instead of surrendering these policies, businesses can now sell them for more than their cash surrender value as a Lifetime Settlement.

Corporate life insurance is usually tied to specific tax, financial, and risk strategies for a specific time frame. For example, a term policy may be purchased for a key executive. When that executive retires, the company either surrenders the policy or offers the client the opportunity to take over the coverage.

Before surrendering the policy, the corporation should consider more productive alternatives_sell the policy and receive the proceeds or offer the retiring executive the settlement as a retirement bonus.

When should businesses consider Lifetime Settlement?

  • Buy/Sell funding
  • Business is bankrupt
  • Policy is poorly performing
  • Purchasing a minority interest in a closely held business or limited partnership
  • Facilitating the transfer of a business to the next generation
  • Paying off debt
  • Funding a deferred compensation program
  • Buying back stock from a partner or a stockholder

Generally, any insured over the age of 65 who has experienced a change in health can qualify for a Lifetime Settlement. The minimum face amount is $250,000 and any type of policy qualifies.

Before selling a policy it is important that individuals consult their advisors and examine all options available to them.

Would you like to find out what your life insurance is really worth?