Chapter 8

The Process

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Here is a final, high level summary of the steps in the life settlement transaction. Use this page as a guide for when you are going through the life settlement process.

1. Decision

Evaluate the appropriateness of a life settlement and considers all the alternatives. You can get a quick estimate here. Then, consult with your a financial and tax advisor to help you make a decision. If you want to proceed, you must then decide if you want to use a broker or engage directly with licensed providers.

2. Information gathering

The life settlement broker or the licensed providers obtain information about the life insurance policy and the state of your health. Your medical records are gathered at this stage. Then, an independent life expectancy underwriter generates the life expectancy report for the licensed provider.

3. Review, analysis and offer

Life settlement providers calculate the value of the life insurance policy and decide whether to make an offer to buy to the life insurance policy. If the life settlement provider's analysis of the policy indicates that an offer should be made to buy it, the provider makes a formal offer.

4. Receipt and evaluation of offers

The broker or provider will present their offers to you with an objective explanation of each offer. You should then huddle with your financial advisor on the offers to evaluate them. If you are happy with the offer, you should communicate this to your life settlement broker or the specific provider (if you are working directly with them).

5. Completion and return of closing package

The provider sends a closing package, containing the documents necessary to formalize the policy owner's acceptance of the offer and to request that the life insurance issuer transfer ownership and beneficiary of the policy to the life settlement provider. The broker or provider will help explain the various forms to you. Once you sign all the documents, they will be returned to the provider for processing.

6. Submission of the transfer-of-ownership forms and escrow of funds

When the life insurance provider receives the completed documents in the closing package, it makes a formal request to the life insurance company for the transfer of the policy's ownership. After all the documents are signed, the funds to be paid for the life insurance policy are given to an escrow agent for safekeeping pending the actual transfer of the policy's ownership to the life settlement provider.

7. Acknowledgement of the ownership transfer and release of the escrowed funds

When the transfer of the policy's ownership and beneficiary is completed and recorded by the insurance company, the insurer sends confirmation to you and the life settlement provider (the new policy owner). The confirmation is forwarded to the escrow agent, who then releases the funds in payment for the life insurance policy.

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