March 2018 - Life Credit Company

What is a Viatical Settlement?

If you’re looking to sell your life insurance policy, you have likely encountered the concept of a viatical life settlement. While such a life settlement can provide quick cash, it does so at a cost—and for some, that price may be too high. What is a Viatical Settlement? Weighing the pros and cons of a viatical settlement first comes down to understanding what it is. A viatical settlement involves the sale of a life insurance policy to a third party. This type of life settlement typically occurs when a person is facing a terminal illness and would rather have a lump sum of money from his or her life insurance while still living, as opposed to passing the death benefit down to a beneficiary. This arrangement, also called a senior settlement, usually results in a payment that is higher than the cash value of the policy, yet less than the death benefit. Essentially, the policyholder is compromising on the policy’s value in order to be able to get a rapid payoff. Often, such money may be needed to ease the burden of medical bills, or could even help a person live out his or her final months in comfort. However, a viatical settlement isn’t the only option for those looking to draw value from a life insurance policy. What Other Options Are There? Loans on life insurance can also provide financial assistance to cancer patients and others in need. Such options, however, don’t involve the full surrender of a life insurance policy, but rather a temporary transfer, which means the holder and his or her family can ultimately regain...

What is the Meaning of Absolute Assignment?

When you purchase life insurance, you typically do so to prepare for after your death. However, an insurance policy is an owned entity and, as such, can be sold or used as collateral for a loan in order to provide cash value to someone in need. Just as there are many questions when considering which type of life insurance to get, there are also a lot of factors to consider if using that policy to access the cash you’ve invested in it. It’s important to understand terms like absolute assignment and collateral assignment, as well as weigh the differences in order to satisfy your particular financial needs. What is absolute assignment of life insurance? Absolute assignment in insurance involves signing over your entire policy to another person or entity. The person who is selling or gifting the policy is known as the assignor, and the individual or individuals who receive it are the assignee. The assignee takes full ownership of the policy, being held liable for any premiums and also having the authority to change or designate new beneficiaries. What is a collateral assignment of life insurance? Collateral assignment of life insurance essentially works like a standard loan. The insurance policy is “collateral” for a loan, and the person or organization that pays out that loan is the temporary beneficiary of the policy’s death benefit until the loan is repaid. The entity taking over the policy does so on a conditional basis and, therefore, doesn’t have the authority to make changes to it, re-sell it or take any of its cash value. Instead, the assignee can only draw on...

10 Overlooked Living Benefits of Life Insurance

Life insurance is typically considered something that assists people after death—however, permanent life insurance with living benefits can provide immediate, and significant, financial assistance to people in need. A living benefit rider can be written into a life insurance policy to allow the client to draw upon the policy’s cash value in the event of a terminal illness. What are the benefits of whole life policy with this option? Financial assistance: Mounting medical bills from serious illnesses like cancer can quickly bankrupt a patient. Future financial security: Taking care of debt associated with a medical crisis as it occurs helps families avoid years of complications. Peace of mind: Knowing that you can tap into the cash value of your life insurance policy may provide a needed sense of security in an otherwise worrisome time. Dignity: Having access to financial assistance means a patient with a terminal illness is able to control his or her final days. Stress reduction: Stress has been shown to increase a person’s risk for medical complications, so someone fighting an illness can benefit physically from being able to proactively manage finances. There are life insurance advantages and disadvantages, however, as not all plans offer the living benefit option. For instance, if you’re considering what are the benefits of term life insurance, it’s important to note that term policies don’t allow policyholders to draw on the cash value during life, as they’re only available for a certain length of time. That’s where Life Credit’s Living Benefit Loans can come in. The benefits of this program include: Financial help, regardless of policy: Life Credit provides loans no...