What You Need To Be Aware Of When Considering Life Settlements

Life settlements may have specific consequences to you in a variety of ways. Some of the more common things that may be affected by Life Settlements are:

1. Bankruptcy - If you have reason to file for bankruptcy, monies you receive as a result of a life settlement may be taken away from you by creditors, personal representatives, trustees or receivers in your bankruptcy or by the internal revenue service
2. Tax Consequences - depending on your own personal tax situation, you may incur tax consequences as a result of entering into a life settlement. If you are considering a settlement, you will want to check with your tax preparer to see what penalties or additional taxes may be incurred.
3. Insurance Policy Considerations - If you are entering into a life settlement and your policy covers additional family members, you may lose that coverage, your premium payments may be affected, your cash values or dividends (if provided for in your policy) may be affected, you may have a loss of benefits including conversion options, waiver of premiums and other consequences. Be sure to discuss the full consequences of a life settlement on your policy with your insurance representative.
4. Other Income Consequences - if you have social security income, other forms of retirement income, receive (or apply for) public assistance in any form, a life settlement may impact your ability to continue (or begin) receiving benefits. It is critical that you determine all of the financial consequences of a life settlement before you sign any contracts.

There are some other considerations to be aware of when you are considering a life settlement which include (but may not be limited to)

• Other people are going to make money on your life settlement which may decrease the amount of money you are likely to receive. You have the right (and you should exercise that right) to find out who all of the people are who may (or will) receive any type of payment associate with the sale of your policy, how much they will receive and any terms associated with those payments
• Policy Extras such as accidental death, future increases in death benefits and coverage for other family members may impact your settlement - you should contact your insurance company or agent to find out what provisions and riders are included with your policy and see which parts of them may be included in your settlement. Providers are often willing to pay additional premiums for riders such as future increases in death benefits. You also need to understand that if the policy you sell offers additional coverage for other family members their coverage may be lost when you sell your policy.
• A life settlement is a serious financial decision for you to make. Often considering a life settlement means that you have a serious medical condition that will result in your not being able to collect the cash value of a policy at maturity. If this is your case, please be sure to consult with a trusted financial advisor to ensure you are making the best possible decision for your particular situation.