life insurance buyout
Posted in Variable Life Insurance 9 months ago, 2 replies
submitted by Jane in Ft Lauderdale
Your friend can likely get his bust buy out deal, if he needs on direct from the company that issued his policy and not some outside group. If he does sell or cash in his policy then his wife will be losing that money off of the family balance sheet should he spend part or all of the funds. John... john@johndelaneyinsurance.com
submitted by John DeLaney CLU in Louisville KY
@ May 24, 2009 - 09:46 PM
Reply
To answer your question, yes these do exist, and are legitimate business transactions. It is called a viatical agreement, and basically it is where a third party purchases the interest in a life insurance policy. Typically, there needs to be a life expectancy of less than five years, and it needs to be a whole life policy before any company would be interested in purchasing. For example, if you had a $100,000 life insurance policy, and because of an illness, you were not only terminal, but needed the money now, a company may come in and purchase the policy for $70,000. You get the $70k now, and they get the $100k when you pass.
Problems, since you are not receiving a death benefit, the purchase from the viatical company may be considered income and be a taxable event. Also, the money may be spent outside of what it was intended.
Do an internet search for viatical agreements, you will get all the info you want.
David J. Horsey Jr., CLTC
Clearview Insurance & Financial Services
www.myclearview.com
Problems, since you are not receiving a death benefit, the purchase from the viatical company may be considered income and be a taxable event. Also, the money may be spent outside of what it was intended.
Do an internet search for viatical agreements, you will get all the info you want.
David J. Horsey Jr., CLTC
Clearview Insurance & Financial Services
www.myclearview.com