Does Anyone Know The Drawbacks To The Latest Idea Of Investment Life Insurance Whereby You Get Money Up Front?
Posted November 19, 2009 – 4:25 am in: structured settlements FAQThe idea is that if you are 70 or older investors will pay you money and they take out life insurance on your life and collect when you die. To me it sounds like it is illegal,a scam or unethical.
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2 Comments
I happen to work in the life settlement business. The reason it works is that we pay much more then the surrender value of the policy and if a senior can’t afford the premiums we are much much better deal. Also in many cases the proceeds from selling or settling the policy can be used to purchase a new policy that works better for the senior.
It is a life settlement and there are variations to the type. A traditional life settlement may or may not be a good idea depending on your circumstances. IF you have a policy that is 2 years old or older, you may be able to sell that policy for a % of the death benefit. The older, sicker you are compared to when you bought policy, the better the offers may be.
A new twist that will surely draw the wrath of regulators, IRS, and anyone else is the scenario where you buy a policy today and put it in a trust, and 30 days later, you sell the beneficial interest of your trust to someone for 3-5% of the death benefit.
you are looking for trouble with this arrangement as someone needs to lie to make this deal work.