States Attempting to Pass Laws Against Life Insurance Sales

Life InsuranceState statutes in many American states are catching up with the popularity of retirees or chronically ill insured selling their life insurance policies for ready cash.The business transactions became popular first with the revelation of AIDS victims, and during the early tragic period when the disease was a definite and short term death sentence. Since then selling personal life insurance policies for cash has become a viable solution to financial difficulties for persons suffering from other diseases, and more recently has entered the mainstream retiree market.

If you do not prefer to leave your death benefits from personal life insurance to your children, you may ask yourself, “Should I sell my life insurance?” Would it be practical and advantageous for you to have the ready cash during retirement instead of paid out to an heir after your death? The economical fact that retirees are living longer than their post-recession retirement funds are lasting makes the option attractive. In response, some American states are attempting to pass laws making the transaction illegal.

The following are some of the concerns that are influencing the adoption of laws forbidding selling your life insurance policies:

1. When you are selling your policies to a third party you should know the exact identity who is purchasing the policy.

2. Do not be financially illiterate of the tax effect this will mean for you on the difference between the premiums you have paid and the lump sum received from the policy sale to a third party.

3. Do not fall into the trap of accepting multi-payments, which extends the tax viability and certainly limits the funds you have in any given year. Take all proceeds in one lump sum.

4. Ignorance of the law is still no excuse, so be certain you are aware of your state laws on this transaction as well as the federal tax laws.

5. Insure your present beneficiaries on the subject policies are cognizant of your plans and are also willing to sign releases removing themselves from your policies as your beneficiaries.

6. Take steps to fully take care of your last expenses beforehand or to set aside such dedicated funds so that your funeral costs will be paid in full without need of the policy funds.

In summary, your best advice would be to consult either your insurance policy insurer or a financial planning advisor before making a decision. Check out reputable companies such as Harvest ACS that can offer you both advice and information on life settlement.


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