Life settlements are becoming a much utilized tool of financial planning and source of retirement income. Inevitably, the first question asked by potential policy sellers is regarding the potential life settlement value of their life insurance. There are a number of things that contribute to the value of a life insurance policy on the secondary market.

One of the most important aspects of valuing a life insurance is the insured themselves. The health, gender, age, family history and any applicable health conditions contribute to the insured’s life expectancy. The insured’s life expectancy is a major component of pricing a life settlement offer by potential buyers. The longer the life expectancy, the less valuable the policy is.

The life settlement value of life insurance is also affected by the type of policy. Non convertible term policies are not appealing on the market, but Universal, Whole Life and convertible term policies are sought after. Universal life policies are often the most attractive to buyers as they provide a great deal of flexibility in premium payments and often have cash value that can be accessed by the buyer.

Another important factor in valuing a life insurance policy are the owners themselves. If the owner has a divorce or bankruptcy on their record, some buyers may fear the policy will be claimed by a creditor or former spouse. The owner’s state of residence also affects a life insurance policy’s value. Since states regulate the secondary market of life insurance, some states are more restrictive than others about the transaction and investment aspect of a life settlement. The competitive environment that results affects the offers that buyers ultimately make to policy sellers.

The life settlement market itself has an impact on the value of life insurance policies. The buyers of life insurance policies are typically large financial institutions such as retail banks, hedge funds and investment funds. When these institutions have capital to deploy the life settlement market becomes more competitive and policies carry a premium. However, the financial institutions don’t have as much money to invest in policies, the life settlement market may see discounting of policies.

Deciding to sell one’s life insurance is an important decision. The most important part of that decision is understanding how much a policy is worth and taking the steps necessary to maximize its value.

Want to find out more about a life settlement, then visit Kelly Ramirez’s site to get a free life settlement appraisal.

categories: life settlement appraisal, life settlement, life insurance, insurance, financial services, retirement