Life Insurance Settlement Guide

In a column called “Putting Your Life Policy in Someone Else’s Hands” Washington Post personal finance columnist Jane Bryant Quinn covers some of the pros and cons when it comes to Life Insurance Settlements.

“A life settlement makes sense if you truly have no need for any more insurance — no beneficiary who could use the money, no charity you want to give the policy to, no business purpose, no estate taxes to fund.

It’s also useful if you have a policy that’s poorly priced — say, an older universal life policy with large surrender charges. Sometimes you can sell it for enough to buy a new and better policy for the same face amount, said fee-only life insurance adviser Peter Katt of Mattawan, Mich.”

In the column Quinn also covers a new type of life settlement where a company will lend you money against your policy. These so-called legacy loans will be funded by lenders and investors who will pay all the premiums. You owe no tax. At your death, a portion of the policy proceeds are used to repay the loan plus 9 percent interest.

The column is well worth reading if you’re interested in life insurance settlements. Here is a link.