EMPLOYEE LIFE INSURANCE
A man who was on disability leave from work wondered if he could work part time for his brother without losing his disability benefits. When I asked about his former employer’s benefits, he praised the company’s health plan but worried about paying the premium. That was the reason he wanted to work part time. Then I asked about his employee group term life insurance. He was insured for $350,000.
Term insurance has no cash value.
He was told by the employer’s Human Resources rep. that he would have to convert the term to an individual policy, if he wanted to keep his life insurance. When she told him the premium, he nearly fainted. “I can’t afford that,” he said.
“I know,” she said. “That’s what everyone says.”
David let the policy go. The Human Resource specialist didn’t know there were alternatives — and there are several. Insurance companies offer alternatives for people who can’t afford to maintain their current policy. Additionally, the Human Resource specialist didn’t know about insurance company alternatives or viatical settlements — the choice of last resort if no other alternative is as good.
It was too late to help David. He had left work four months earlier and with that, lost his life insurance.
CAN’T AFFORD THE PREMIUMS
You do have choices. If you have dependents who will need cash after your death, speak to an agent from the insurance company. Ask about nonforfeiture options. Ask about Accelerated Death Benefits. If neither are appropriate for you, contact me. I may be able to suggest other options.
If you have a life-threatening illness, there is no charge when you request advice or consultation.
ALLOW LIFE INSURANCE TO LAPSE
DON’T–until you have spoken with at least 3 people who should be able to give you a total of 5 alternatives.
SELL WITHOUT CHECKING COMPANY
There are two companies to check: the insurer and the purchaser.
Check to see if the insurer can offer you a better deal. Many offer accelerated death benefits and, if they do not, theyu may be willing to negotiaste with you rather than have to pay the investors who buy your policy.
If you are considering selling, find out if the company is licensed in your state. If you use a broker to contact purchasing companies, check with the state insurance department to find out if the broker (as wll as the purchaser) must be licensed–and if the broker does hold a license.
Then ask if there have been any complaints filed against the purchasing company. Also check this website. There may have been complaints in other states, and you need to know these.
Ask about lawsuits filed against the company. In particular, ask if any government agency filed suit against the company.
Use a search engine to find out about complaints. Type the company’s name in the search engine and add the word, “complaints.” Then do that using the word, “lawsuit.”
SELL FOR INSTALLMENTS TO HELP YOU AVOID TAXATION.
Viatical settlements are not taxable to insureds whose life expectancy is twenty-four months or less. The settlement is taxable to healthy seniors and people with longer life expectancies. You may avoid taxes with a loan or installments, but What if the company goes out of business and can’t pay you the full amount?
REFERRED TO A COMPANY/BROKER
o Be sure the company is licensed and does not have a complaint history.
o Don’t sell to the first company that rings the bell.
o Whether you do this yourself or through a licensed broker, be sure to run an auction. Offer your policy to five or 6 viatical and life settlement providers. This always results in thousands of dollars more.
Think of it this way: If you were selling a car that you knew was worth $10,000, would you sell it to the first person who answered your ad? He might offer $5,000 — or less, if he knew he was the first to place temptation under your nose. Why not let a few people get excited about your car, and fight — with dollars — to own it?
See Cash for the Final Days for details about these and other risks. The book is out of print but available through many libraries. Additionally, you can email the author if you have questions. ggwolk (at) Viatical-Expert.net