Senior Settlements-Seniors Uncover Hidden Assets

Senior settlements allow a qualifying life insurance policy owner to sell an existing policy to a financial institution in exchange for an immediate lump sum cash settlement.  The amount paid for the policy is a discounted percentage of the policy's net death benefit and represents the present day value of the policy. This purchase price is determined by considering the insured's estimated mortality (life expectancy) and the associated cost of premiums to keep the policy in force for that timeframe.

There are 2 types of life insurance settlement transactions:

•  Life Settlements create immediate liquidity from a non-performing asset, allowing policy owners to cash out of unwanted, unaffordable or obsolete life insurance policies insuring a senior over age 65.

•  Viatical Settlements enable someone facing a terminal illness to utilize the present day value of their life insurance policy to ease the financial burdens that can be caused by the high costs of medical care.

Some financial advisers caution investors who are looking to purchase these Senior Settlements on their own. Joseph Belth, professor emeritus of insurance at Indiana University and publisher of the monthly newsletter "Insurance Forum," says senior settlements and viaticals are both "highly speculative investments." "Investors have been told they're extremely safe, and that is simply untrue. For seniors who invest it could be disastrous. They can lose a lot of money, if not everything," he adds. "They could also possibly make some money, but it's highly speculative." It is certain that dealing with a reputable company, like an institutional funder, mitigates risk.

There's an old saying that the only thing certain in life is Death and Taxes. Well, we all know about the former, but Taxes are another issue that requires close study, advisory services and scrutiny before choosing senior settlements. While people with life expectancies of less than two years are usually exempt from paying federal income taxes on proceeds from viating, those projected to live longer are may find themselves in a more complicated tax situation. For this reason, it is strongly recommended that you consult a tax professional before viating.

Being diligent, aware and critical, verifying and background checking become very important for those considering senior settlements from life insurance. Senior settlements fall between regulatory cracks. It is very much a case of buyer beware. One final caution. You should realize that insurance companies carefully write policies with the intention of making a profit. As a result, the only way the buyer of your policy can make money is if you die much sooner than you want to. If you're tempted, that's something you should think about. (Kathy Kristoff, L.A. Times)

Life Settlements enable individuals, businesses and other organizations to sell Life Insurance policies they currently own - but no longer need or want - for an amount greater than the Cash Surrender Value (CSV). As an alternative to surrendering a Life Insurance policy this innovative service allows the owner to receive the greatest value from an asset they no longer desire to maintain.

Whether positive, negative, neutral of cautiously optimistic, critically skeptical . the Senior Settlements industry is forging ahead, offering Seniors and their financial advisors new and exciting possibilities. For the Senior, benefits are apparent; for the private investor...well...caveat emptor!

Ideas Mixed on Cut In Seniors' Taxes (Washington Post)
The County Council received deeply conflicting advice this week about the property tax credit for seniors, which it is trying to rework before the break is applied to tax bills that will be sent out this summer.

Salem seniors to get one-week jump on life after high school; Mild winter translates into June 8 graduation (Eagle-Tribune Online)
SALEM - High school seniors anxious to earn their diplomas won't need to wait as long as previous graduates to get their hands on one. This week, the School Board agreed to allow Salem students to graduate June 8 - a whole week earlier than seniors graduated in the past four years.

Kansas Senate OKs tax break for seniors (Kansas City Star)
TOPEKA | The Kansas Senate on Wednesday approved $23.3 million in tax breaks, ranging from a Social Security exemption from state income tax to more property-tax relief for low-income seniors.

Desert officials deliver meals to seniors (The Press-Enterprise)
On Wednesday morning, Palm Desert Mayor Dick Kelly woke up to a new task. Before heading to the office around 9 a.m., Kelly stopped by the Joslyn Cove Community Senior Center in Palm Desert to deliver food to homebound seniors.

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