• 500 West Madison Street, Suite 2700
    Chicago, IL 60661
  • Phone: (312)-630-0800
  • Fax: (312)-630-0833
 
 
 

Corporate Lifetime Settlements

When should corporations consider lifetime settlements?

Your business may own a life insurance policy that no longer plays its intended role, is under-performing, or is noncompetitive. Instead of surrendering these policies, businesses can now sell them for more than their cash surrender value as a Lifetime Settlement.

Corporate life insurance is usually tied to specific tax, financial, and risk strategies for a specific time frame. For example, a term policy may be purchased for a key executive. When that executive retires, the company either surrenders the policy or offers the client the opportunity to take over the coverage.

Before surrendering the policy, the corporation should consider more productive alternatives, including the sale of the policy to receive the proceeds, or offering the policy settlement to the retiring executive as a bonus.

When should businesses consider Lifetime Settlement?

  • Buy/Sell funding
  • Business is bankrupt
  • Policy is poorly performing
  • Purchasing a minority interest in a closely held business or limited partnership
  • Facilitating the transfer of a business to the next generation
  • Paying off debt
  • Funding a deferred compensation program
  • Buying back stock from a partner or a stockholder

Generally, any insured over the age of 65 who has experienced a change in health can qualify for a Lifetime Settlement. The minimum face amount is $250,000 and any type of policy qualifies.

Before selling a policy it is important that individuals consult their advisors and examine all options available to them. Would you like to find out what your life insurance is really worth?

The decision process begins with the right questions.

Contact Schwartz Benefit Services right now and speak to a member of our team who can help review your company's life insurance policies, and determine their value and effectiveness.

 

In a Life settlement transaction the seller receives a lump sum payment from the purchaser of a life settlement--typically for more than the policy’s cash surrender value but less than the net death benefit. As opposed to life insurance surrenders, they may take weeks or longer to complete.

Please note that the number of bidders for a policy may be limited; proceeds from sales of similar policies may vary and may be subject to claims of creditors. Receipt of proceeds may impact eligibility for government benefits and entitlements. Prior to sale, the insured should consider the continued need for coverage, impact to estate plans, availability of insurance, cost of comparable coverage, and tax implications. There may be high fees associated with the sale of a life settlement and your personal medical information may be disclosed to 3rd parties. Please consult an appropriate professional regarding your individual circumstances.

The proceeds from a life settlement transaction may be subject to claims of creditors. The amount received for the sale of the Policy may be impacted by the circumstances of the particular purchaser of the Policy, the insured’s life expectancy, future premiums, the death benefit, the terms of the Policy, and the current market for insurance policies, among other factors. The amount received for the sale of the Policy may be more or less than what others might receive for the sale of a similar policy.