Your life insurance policy will become more expensive as you age. You may find it difficult to afford your policy, which is why many people end up giving up their insurance policies. LIMRA and the Society of Actuaries conducted a 2019 study and found that 4 percent of life insurance policies – worth billions of dollars – lapse each year. Life settlements are an alternative.
It may be possible for you to sell your life insurance policy and get cash to pay high medical bills, divorce costs, or any other living expenses. It can be difficult to choose the right companies without federal regulation. We compared 15 top life settlement companies to find the best. This was done based on their reputation, national availability, customer service, and sales process. These are the top four life settlement companies in the industry.
Because of its reputation and size, Coventry landed the top spot in our ranking. Coventry was the first to create a secondary market in life insurance, and it is considered a pioneer in the life settlement industry. It is the country’s largest life settlement provider, accounting for 40% of all transactions in 2020. The Deal named Coventry the number one life settlement provider for 2020.
Abacus Life Settlements was chosen for its fast sales process and quick quotes. Within 24 hours, you can receive a quote and find out the value of your policy. Abacus will make a formal offer within 14-21 days. After accepting the offer, the money will be in your bank account within 21 business days. This is quicker than any other company we reviewed, making Abacus Life Settlements the best choice for quick sales.
Magna Life Settlements was awarded a top ranking in customer services. The company provides a free life settlement calculator, detailed white papers, a company blog, and a YouTube channel. Magna Life Settlements provides these resources, which are stronger than other competitors for high levels of transparency and consumer awareness. The company is a great choice for client education, as both financial advisors and customers can find plenty of information.
Q Capital Strategies was selected for its innovative approach to life settlement. Q Capital Strategies’ estimate system speeds up the life settlement process and makes it more accurate. Q Capital created the system internally, allowing customers to customize, enhance, and maintain transparency. To stay ahead of the competition, Q Capital is continually updating the system. This allows for greater innovation.
Most Frequently Asked Questions
What is a Life Settlement Company?
Life settlement companies buy active life insurance policies from seniors and offer cash settlements to secure the right-to-death benefit rights. These companies are the beneficiaries of life insurance policies purchased and are responsible for the premiums necessary to keep the policies in effect. These companies sell the policies to investors, or keep the policies and then collect the death benefits.
If they have held a policy for at least six years, then they may be eligible for a life settlement. The death benefit must typically be at least $100,000.
How do Life Settlements work?
Life settlements are an alternative to cashing out your policy. They also allow you to get the policy’s cash surrender or cash value. The buyer will pay your premiums, and you’ll receive the death benefit upon your death.
The Life Insurance Settlement Association (LISA), asserts that there are some guidelines for life settlements. You will get more than the policy’s cash surrender amount and less than the death benefit. These four factors will determine how much you receive.
- The policy’s death benefit
- Annual premiums for the policy
- What is your life expectancy and how many years do you have to pay for the premiums?
- What is the expected return on investment for the buyer?
What is the difference between a life settlement broker and a company?
Two options exist for selling life insurance policies: life settlement brokers or life settlement providers (companies who purchase life insurance policies).
Life settlement brokers are bound by a fiduciary obligation. This means that they have to put your interests first. They might collect bids from potential buyers and help you negotiate the best insurance policy for you.
Life settlement providers buy life insurance policies directly. The broker fee is eliminated as they make their money by selling life insurance policies to institutional investors. Working with a life settlement provider can help speed up the sales process.
What is the cost of life settlements?
Although life settlements do not have to charge out-of-pocket expenses, brokers will need to be paid a commission if they are selling the policy. Brokers will sell your policy to the best life settlement provider and collect a commission.
Other fees may apply to the sale of your policy. These fees vary from company to company. Before you sell your policy, we recommend that you get a breakdown of all costs associated with a life settlement.
How to choose the Best Life Settlement Company
Many factors go into choosing the right life settlement company, such as your age, policy size, and health. To get the best price on your policy, we recommend that you compare quotes from different life settlement companies. Before you sell your policy to a broker, be sure to understand all fees and commissions.
We recommend that you only work with reputable brokers or life settlement companies that are licensed in your area.
Who can use a life settlement company?
A life settlement company can be used by anyone with a term- or universal life insurance policy. However, there are often policy minimums and age requirements. Many life settlement companies won’t buy insurance policies from anyone under 65, or with policy values of $100,000 or less.
Are life settlements legal?
Life settlements can be considered legal transactions. In 1911, the Supreme Court ruled that life insurance was an asset and could be assigned for value. 5 Many terminal patients required money to pay for their treatment. This created a secondary market to sell life insurance policies, providing people with cash.
Regulations governing life settlements are made at the state level. 44 states and Puerto Rico offer protection. Many states have strict anti-fraud guidelines and disclosure rules.
You may be interested in life settlement companies if you are looking for cash and considering selling your life insurance. It can be difficult to tell which company is the best. We started by looking at the top 15 settlement options for life. We looked at each company’s reputation, customer assistance, and nationwide licensure.
We also compared fraud prevention, the time it takes to sell, and other features. We also compared the customer service and transparency of each company to help us choose the best life settlement companies.