DidYou know you can sell your life insurance? I am interested in my GNs' thoughts on this sensitive subject
I have a term life insurance policy I feel I can no longer afford the premiums for.
I have discussed with our very adult children if they wish to take over the premiums and own the policy on my life - they say no! The money would be more beneficial to us now both on a disability pension and living the dream in our caravan travelling OZ.
Rather than just stop paying the premuims, I remembered that one can assign the policy over to another person for a amount of money. IT IS LEGAL! I have checked with the insurance company, here in Australia.
My policy is a term life policy which has increasing premiums as well as increasing life cover. So from a investors point of view it would be a good long term investment. IE
Policy currently worth $175,000.00 on my departure, if they purchased it for say $75,000.00 and I happen to depart their gain would be $100,000.00 NOT BAD EH?
If for reasons of me surviving for some twenty years- yes- they would have paid approx an extra $45,000.00 in premiums plus having paid me $75,000.00 total being $120,000.00. BUT the payout then would be approx. $447,000.00 A profit of around $327,000.00.
To sell a policy when one does not have a terminal illness it is sold on a "Lifetime Settlement" arrangement, if one had a terminal illness it is sold on a "Viatical Settlement " arrangement.
Insurance companies in Australia usually do not encourage this knowledge to policy owners. But in America there are big corporate companies who invest in these type of situations. Only in America you say! But as we could do with the extra money for our early retirement bought on by disabilities and not having a great pot of gold anywhere it would be vry beneficial to us to find a purchaser.
I have discussed this with a few other GNs since we have been on the road and they have said they have let policies fall by the wayside as they couldn't afford to pay the premiums. Well I want to find a broker or person who can find me a purchaser for mine.
What are my learned GNs thoughts on this sensitive subject.
I do realise the seriousness of selling it to someone and being bumped off! to claim on the payout- but the safest way to sell would be through an insurance broker who could handle this and the purchaser not know your identy
Any of our GNs know anything on this subject? Google search "Lifetime Settlements" & "Viatical Settlements" for further info on the net as I have.
Hmmm. Whilst I can understand one's predicament of needing more dollars, me personally I'd be a bit reticent to indulge in this transaction. Seems to me there would be too many legalities of family members taking such a business transaction to court. Imagine upon your demise, your children thinking they are getting an inheritance and instead some complete stranger shows up and demands payment. Also, I'm a bit confused. Let's say your spouse dies first. Are you then left to bury this person and then giving the life insurance policy to some complete stranger. Aren't you then screwed because you sold a policy for a mere $75 grand?
I'm not trying to annoy you. Just that if I were to indulge in such business, I would want to know many more details.
Thank you for your comment Gordon this is exactly why I posted it to get others opinions and advice. My children do not own the policy, I do it was never taken out for their benefit in the first place so "their inheritance" it never was in the first place just to clear that statement up. Though it does amaze me when children expect everything left is "theirs" as being accepted! The policy is actually assigned by the policy owner and that is me. My children, four of them aged from 45 down to 39 are all well financed and taken care of apart from any insurance policy on my life, so that is not a concern. Also consider the amount of money in my bank account earning interest for me & my hubby, if we passed family members would get this anyway. If there was any left after us living a little more comfortable, that is. If I passed on first the money would be put aside for burial arrangements of which we have already anyway so would not leave him without. Not being objective to yur remarks as this is what I need to look into on this matter I seek all comments like this, thank you again Gordon. Cheers Dawn
ps If someone were to invest they would ask all relevant questions I am sure also. Naturally the more likely my demise was near the quicker they would get a return on their investment, but the longer the more they would get.
-- Edited by Dawn on Thursday 26th of May 2011 08:59:54 PM
Obviously the "investor" would be named the beneficiary on the insurance policy. I could not believe anyone would enter such an agreement without legal representative.
From my point of view this is a far better scenario than the poor folk who get sucked into "reverse mortgages" or the other scam used buy some retirement villages, whereas you buy your way in and then they deduct ten percent per year of your entry fee.
It may even be beneficial to talk to a solicitor, because they often have people waiting in the wings to invest.
Good luck, sound likea good deal to me.
Dusty
PS. I would be interested, but most people are likely to outlast me.
I baulked at this subject at first glance and then had a think about it.
We usually take out insurance to benefit those left behind and if they don't want or need it, why not enjoy the fruits of the policy, with real careful legal advice.
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I must be a binge thinker. I do it a lot at times, then, not much at all.
A good investment for a younger person maybe but difficult for them to raise the purchase price no doubt. Maybe parents interested in this type of investment for their children, a way of owning a home sooner than later. I know it sounds awful in a way but it serves both parties well the seller gets the money rather than loose the policy and the invester maybe a thirty year old get payment to purchase their first home. Parents need not tell them where the money came from anyway. On research in America I found wealthy shall we say business people raise capital with these polocies they have a number of policies on their lives and to raise capital they sell off a policy. It is illege though to buy a policy with selling it as the intended purpose, and a policy can not be sold unless it has been in force for 2 years. But I say how is the insurance company going to know you purchased the policy with the intention of selling it. Also it is difficult to sell a policy unless you are at least 60 to 65 or have a terminal illness.
Definitely something to be handled by a solicitor, no doubt in my mind. How many of you realise you can do this? When you purchased your life policy was it ever explained to you? Trouble is it is difficult finding someone in Australia who can handle it. I have spoke to three insurance salespeople who had to get back to me about it and wow they didn't even know it was a saleable item, legally. AND they sell the policies! I have spoken to my solicitor and he consolted with a couple of collegues who didn't know how to handle it so I am still searching, won't give up!!!!!!!!!!!
I had 2 policies many years ago and due to a rather sticky divorce, couldn't afford to keep up the payments. I made the policies 'Paid Up' which meant that the policy remained in place and the money that I had paid in, accrued interest untill the maturity date. I then received a lump sum and a small pension for life. Don't know whether this would work in your case but maybe worth a try.
I cannot give you advice unless I am acting for you.What I would do is engage a Law Firm to sort out and advise you on the correct path to take.Insurance is always a bit of a mine field and that is why a legal Eagle is the best person to handle it for you.Good luck.Father Ted.
Thank you Stan, Thommo & Father Ted for your responses. My policy is only a "term" life insurance policy-no value other than on the death of the insured so there is no "paid up" facility. So my reasoning why not try to sell it rather than just let it fall by the wayside. Thanks folks cheers Dawn
