In the past, these transactions, commonly known as viatical settlement agreements, were almost exclusively used with terminally ill policyholders. However they have been extended to healthy seniors, where they can enhance the financial and estate planning flexibility for some affluent seniors.
Several factors play into the determination of the fair market value of a policy.
To receive policy appraisals, the policy owner completes a brief questionnaire consisting of pertinent personal and policy questions. When the funding company has all the pertinent information, it will then determine the value of the policy as a life settlement and make an offer to the policy owner. After the funding company receives the necessary signed documents, it will forward the change of ownership and change of beneficiary forms to the insurance company. When the funding company receives verification from the insurer, it will pay the seller the agreed amount. Qualifying factors Generally, policyholders over the age of 70 will be considered for life settlement transactions.