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How will I know if my policy includes extra
coverages like accidental death, future increases in the death benefit, or
covers other family members? Do these affect my settlement?
Some policies contain extra coverages.
You may want to contact your insurance company or agent to see if your
policy contains a provision or rider providing extra coverages. If your
policy includes a benefit for accidental death, the additional death
benefit may not be included as part of your settlement. The additional
death benefit may remain payable to your beneficiaries or your estate. If
your policy provides future increases in the death benefit, you may want
to ask how much the provider is paying you for the purchase of this
benefit. If your policy is a joint policy, or provides coverage on the
lives of other family members or anyone other than yourself, there may be
a possible loss of coverage.
Are there other options available besides selling my
policy?
Your insurance company may offer
options, such as accelerated death benefits, loans, and surrender of the
policy for its cash value. Before entering into a life settlement, you
should contact your insurance company or agent to see what options are
available.
What other things should I know about a life
settlement contract?
Some things that may be affected if you
enter a life settlement are:
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There may be a loss of life insurance coverage on your spouse or other
family members, if the policy (or any riders attached to it) covers
their lives;
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The amount of premiums you pay;
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Policy cash values or dividends, if provided for in the policy;
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A
loss of other rights or benefits, including conversion rights and waiver
of premium benefits that may exist under the your policy;
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You may incur tax consequences;
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Your ability to receive supplemental social security income, public
assistance, and public medical services including Medicaid; and
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The money you receive for your life settlement could be taken away from
you by creditors, personal representatives, trustees in bankruptcy, and
receivers in state or federal court.
Because of the above, you should contact an attorney, accountant, estate
planner, financial planning advisor, tax advisor, social services agency,
your insurance company, or agent, as applicable, to find out what effect
selling your policy will have on you.
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