Introduction

A life settlement is the sale of a life insurance policy to a financial institution or other funding source for more than the cash surrender value of the policy. The purchaser then assumes the premium payments and becomes the beneficiary of the policy.

A life settlement can help you make better use of the capital currently tied up in your life insurance policy. Rather than paying for unneeded insurance or dropping the policy, you can sell your policy to a life settlement provider.

Life settlements can take place with all types of insurance policies including term, universal, whole life and survivorship. The policies can be owned by individuals, businesses or Irrevocable Life Insurance Trusts.

With a typical yield of three to five times the cash surrender value of the insurance policy (see Case Studies), life settlements give seniors the resources to enjoy their retirement with new financial freedom. Money from life settlements can be used for charitable donations, or to buy a better-performing insurance policy, make other investments, or give cash gifts to family members.

In general, the proceeds from a life settlement are:

• Tax-free up to the amount invested
• Taxed as ordinary income up to the cash surrender value
• Taxed as capital gains above the cash surrender value

At Rumson Capital, we understand that life settlements are not for everyone. Visit Is a Life Settlement Right for Me? to see if you qualify.

Questions, please review our Frequently Asked Questions (FAQ).
For a printable application, click here.