Sale Of A Life Insurance Policy (Viatical, Life And Senior Settlements)

An offer to purchase is generally made as a percentage of the death benefit of the policy. Purchase prices range anywhere from 5% - 85% of the death benefit.

At the least, you should be paid 100 cents on the dollar for each of:

• The Cash Value in your policy, if any. (Cash value is like a savings account and is your money).
• Any premium you paid in advance. For instance, if you paid a premium for the coming year, and sell the policy on January 15, you should at least be reimbursed for every penny that relates to premiums from February through December, and likely from January 16 to January 31 as well.

With such a huge range, there are clearly a number of variables involved in determining price. These include:

• The insured's life expectancy on a statistical basis. Since determining life expectancy for any particular situation involves art rather than strictly science, life expectancy is likely to differ from purchaser to purchaser.
• Death Benefit ("Face Value") of the policy.
• The rating of the life insurance company.
• The dollar amount of premiums payable annually on the policy .
• Other policy provisions, such as a provision which waives further payment of the premium if the insured becomes disabled ("disability waiver of premium").
• The purchaser's general operating costs.
• The seller's negotiating ability.
• If a broker is involved, the amount payable to the broker.

• The amount of profit the purchaser looks to make on the transaction. The percentage is generally relatively high because purchasers know that life expectancy does not predict what will happen to any particular individual -- and that a cure may come along any day.

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