What Types of Policies Can Be Sold?
In general, most life policies qualify for a life settlement. Examples:
Universal Life Policy – a combination of whole life insurance and term insurance, which provides substantial policy flexibility as well as death protection at a reasonable rate. Universal life is commonly referred to as “flexible premium adjustable life.”
Whole Life Insurance – known as ordinary life or permanent life insurance, offers a guaranteed accrual fund that grows tax deferred and is designed to last a lifetime. Whole life insurance has a fixed guaranteed premium and a fixed guaranteed death benefit for the insured’s lifetime, which distinguishes it from term or universal life insurance.
Variable Life Insurance (VUL) – permanent insurance with a side fund that accumulates cash values that grow tax deferred at an affordable cost. In addition to the tax advantages, variable universal life offers death benefits and flexible premiums. Variable universal life is unique in the fact that the policyholder is able to “invest” policy cash values in equities based funds.
Term life Insurance – or “temporary insurance” provides low cost protection for risk of premature death in the event that the covered individual dies within the given term period. Premiums for term insurance are lower than other types of life insurance because there is no cash value growth associated with term life insurance. Term insurance costs are subject to age, gender, lifestyle and current health of the individual.
Survivorship Life Insurance – life insurance for two individuals with a benefit after the death of the last surviving insured. Such policies can be universal life, whole life, or variable universal life insurance. When the first spouse dies no benefits are distributed, the policy remains in effect and premiums may need to be paid. When one member of a couple is in less than good health while the other member is healthy, survivorship insurance is a more cost effective option than other types of insurance. Premiums are relatively low compared to individual policies on each spouse’s life because two lives are insured under survivorship life insurance.