|selling life ins
Nov 5, 2001
I'm thinkimg about selling my life ins, how does this work and what is the best way to go about doing it thanks jrry my email address is firstname.lastname@example.org
| Response from Mr. Berg
First of all, you will want to contact your Department of Insurance to get the list of licensed viatical settlement companies. You might start at www.piperinfo.com to find your state's online webpage.
I would call 1 or 2 companies and request their application. They will require you to sign authorizations allowing them to contact your insurance company and physician. They will also need the approval of the beneficiary. If this is going to be a problem, change your beneficiary first. The whole process usually takes about 6 to 8 weeks to complete. Generally, policies must be at least 2 years old and have face values over $25,000. The percentage offered will be based on their review of your medical history and the less time it appears you have to live the more they will offer you on your policy.
Based on the medical information and policy data, the company will make you an offer. Make sure it is a NET offer and do not accept partial or installment payments. Also, do not be afraid to set limits or stop the sale if you feel it is not going well. Once you accept the offer, the final papers are signed which include the purchase agreement, closing documents and assigment of ownership of the life policy. Many companies will set the money in an escrow account as proof of their ability to purchase the policy during the transaction. The money will be released to you once the transfer has been recorded. Most companies allow a 10 to 15 day grace period after releasing the money during which you can cancel the sale should you change your mind.
Know the impact of this sale on your disability benefits. Receiving a large sum of money will usually cause one to lose their SSI or Medicaid benefits. You may also want to seek the advise of a tax consultant or attorney. Generally, this sale is not taxable by the IRS if the person selling the policy is certified by a physician to have a life expectancy of 24 months or less and the company buying the policy is licensed in the state where the sale occurs. At the filing of your taxes for the year, you will receive a 1099TC from the viatical company which is used to notify the IRS of the transaction. To avoid Being taxed, you will need to file Form 8853-Medical Savings Accounts and Long-Term Care Insurance Contracts.
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