lighthouse capital insurance

lighthouse capital insurance
Most people do not know that they can sell an insurance policy. There are companies that you pay more than the cash value. Even term insurance, which has no cash value, is a candidate for purchase.

This transaction is used as a Life Settlement. Life Settlements are in the scene since 1995, they are not new. During the purchase by an insurance company, buyers typically are pension and institutional funds that have policies in their investment portfolios.

Here are three reasons why a person would make their insurance ...

1. The policy has its benefits.

78% of all insurance is to protect the family acquired. Families with children insure the breadwinner (s) until the time for the establishment of an estate or an appropriate 401 (k)-plan in order for the family, pay off a mortgage and educate their children. Most people have been there and done that.

However, later in life these needs have disappeared. The house is paid, the children were invited to your institution and 401 (k)-plan is a balance ten times greater than your life insurance face value.

Rather than continue to pay premiums, or surrender it for cash value, you can use it for more than the cash value. Buy a boat, an extended vacation or go to the dealer and plunk your money for the car you have always wanted.

2. The policy has a big loan.

There are three ways, common policy can be a great loan.

Firstly, at some point you just have a maximum loan against your policy. It could have been to an emergency, the benefits of an investment option any number of things. But the loan is not repaid.

Secondly, you would have a modest loan years and never paid anything to the major. Each year, but you will receive an invoice for the interest due. If you're like many people, this goes in the round file and you'll never pay interest. What happens is that the interest on the loan. So what is originally simple interest to compound interest.

Over time, the loan and the unpaid interest can consume the entire cash value. That is, if you have the letter from the insurance say that the policy in force, you have to deal with some astronomical sum.

But that is not bad. If your agent to see what your other options might be, he or she informs you that, if the policy lapses, it will be a gain (cash value less premiums paid) that the insurer is obliged the IRS. Even worse is the fact that there is no money in the insurance to pay the taxes (remember them obsolete, because the payment of the premium and / or the absence of other values). They go to have to come with the taxes from somewhere else. I do not think you would have this information is one of the better days.

3. You own Universal Life and interest rates have fallen.

Getting this news is another good day on the e-mail box. This time the letter from the insurance says that the policy in force, you have to deal with more than you can for your first born.

How this happens is, when you bought your policy. One of the most important factors in determining the premium for a certain amount of Universal Life is the interest rate assumption of the original proposal. Do you remember the double digit interest rates? You may have bought your policy during this period. Most insurance agents have suggested, with a lower interest rate assumption to be conservative. However, interest rates, even under these play-it-safe assumptions.

The sale of insurance Avert these three problems. In the first case you do not have to pay more premiums for coverage that are no longer needed. In the second, the problem you have with the loan disappears and is replaced by cash. And in the third and the anticipated expiration of the policy due to the fact that the premium, the coverage is from the charts, by the money received through a sale.

Robert D. Cavanaugh, CLU is a 36-year financial and estate planning veteran and author of the free newsletter "The preservation Estate Advisor". To subscribe and get the free video "How to Sell Your Life Insurance for more than the cash value", go to http://theestatepreservationadvisor.com/freevideo.htm