Reverse Life insurance refers to a viatical settlement. A person sells his life insurance police for cash, usually more than current cash value but less than the face amount. The insured loses all interest in the policy and when the insured dies the money goes to the viatical company.
A life insurance policy that has been viaticized has a couple of things happen.
The insured no longer has any ownership in the policy. Nor are they the premium payer. Those rights along with any other incidental rights of ownership (including the ability to assign the policy or change the beneficiary) are gone once the policy is viaticized.
When the insured dies the proceeds go to the beneficiary. Those proceeds may or may not be taxable.
Reverse Life Insurance is a life settlement in which the policy holder "sells" his policy for cash. In order to be considered for a reverse life insurance transaction, the insured person must show probability of a short life expectancy (very poor health or very advanced age), and the policy must have indications that it would have value to the person(s) buying it (increasing cash value and/or enough years left that death is almost certain to occur before the policy ends).
Co-Founder, TermInsuranceBrokers.com, Goldenzweig Financial Group, Las Vegas, Nevada
Reverse Life Insurance is a life settlement in which the owner of a life insurance policy sells the policy to another party for an agreed upon amount of money. In order for someone to be considered for this, the insured individual on the policy will generally need a life expectancy evaluation completed and show a level of likelihood of a short life expectancy - generally meaning they are in very poor health (sometimes age-related).
Many times a policy may get sold to an investment company because the term period is expiring and they do not want to buy new coverage, but would like to recoup money on the premiums paid out over the life of the policy - the purchasing party may ask the policy be converted to a permanent program before the sale transaction is completed.
You should consult with a life insurance agent/broker before selling your policy to make sure it's the right thing for you and to identify if there are any other alternative courses of action available. If you would like assistance with this process, send me a message by clicking on the "contact me" button.
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The insured no longer has any ownership in the policy. Nor are they the premium payer. Those rights along with any other incidental rights of ownership (including the ability to assign the policy or change the beneficiary) are gone once the policy is viaticized.
When the insured dies the proceeds go to the beneficiary. Those proceeds may or may not be taxable.
Many times a policy may get sold to an investment company because the term period is expiring and they do not want to buy new coverage, but would like to recoup money on the premiums paid out over the life of the policy - the purchasing party may ask the policy be converted to a permanent program before the sale transaction is completed.
You should consult with a life insurance agent/broker before selling your policy to make sure it's the right thing for you and to identify if there are any other alternative courses of action available. If you would like assistance with this process, send me a message by clicking on the "contact me" button.