1.
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What is
a life settlement? |
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A life settlement
is the sale of a life insurance policy where the insured is 65 years
of age or older and does not have a terminal or chronic illness.
In a life settlement transaction, the owner of the policy always
receives more for the policy than the issuing insurance company
will pay for the surrender of the policy. Top |
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2. |
Why would
a policy owner want to sell their life insurance policy? |
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A life insurance
policy is the property of the owner. A policy may be sold when the
insured adult (age 65 or older) has determined that he or she no
longer wants or needs the policy. This may arise in circumstances
such as business owned policies where the insured is no longer connected
to the business, or where the insurance proceeds are no longer needed
to pay estate taxes or final expenses. The contract may be sold
for any reason that the owner may desire. Top |
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3.
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What type
of policy will Parcside Equity LLC purchase
in a life settlement transaction? |
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Parcside Equity LLC will purchase whole life, universal life, variable universal
life, second to die universal, second to die variable universal,
and convertible term policies of qualified seniors.Top |
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4. |
Who will
be responsible for premium payments after the sale of the policy? |
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Parcside Equity LLC will be responsible for all premium payments, after the sale
is final. Top |
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5. |
Is the
process confidential? |
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Yes. All Parcside Equity LLC personnel are guided by the highest standard of confidentiality.
Therefore, no medical, financial, or other personal information
about the seller and/or the insured (if not the same person, as
when an insurance policy is owned by a trust or the insured children)
which Parcside Equity LLC obtains as a result of the transaction,
will be disclosed to any other person or entity not a part of the
process with Parcside Equity LLC without the seller and insured
specific written consent, unless required by law. Top |
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6.
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Are there
any restrictions as to how the funds are to be used? |
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Parcside Equity LLC places no restrictions on how the funds are to be used by the
seller after the insured's contract is purchased. Top |
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7.
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How does
a life settlement work? |
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The insured
or the contract owner if different than the insured submits an application
through a partner, who provides the application to Parcside Equity LLC. We will obtain an in-force illustration of the policy from
the issuing insurer showing the face amount and any outstanding
loans and premiums due.
Parcside Equity LLC also obtains copies of the insured existing
medical records from the insured physicians, or your agent will
provide them to us. No medical exam is necessary for the insured.
We review the records to determine if the insured meets our guidelines
in order to make an offer on the policy.
Once an offer is made and accepted, the life settlement transaction
is documented and it proceeds to closing. An escrow account ensures
that the policy owner receives the purchase price offered. The policy
seller has the right to rescind the transaction within 15 days of
the receipt of funds so long as the purchase price and any premiums
paid by Parcside Equity LLC are returned prior to the end of the
recision period. Top |
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8.
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How long
does it take to complete a life settlement transaction from start
to finish? |
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Our goal is
to complete most transactions within 30 days. The most significant
factor of delay is that we need to carefully review and evaluate
the insured medical records. Sometimes, obtaining these records
may take some time to accomplish and can slow down the transaction
process. Top |
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9. |
How much
will the owner be paid for the policy? |
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The amount
to be paid to the owner of a policy will depend upon a number of
factors, including the medical condition of the insured, the amount
of premium payments to keep the policy in force and the cash surrender
value of the policy. Top |
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10.
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After a
policy is sold, how will the buyer know that the insured has passed
away? |
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Life settlement
providers such as Parcside Equity LLC employ a number of techniques
to determine the insured status. For example, we may use the Social
Security Administration public database, which frees up a social
security number when someone dies. We may periodically call a person
designated by the insured to inquire as to the insured health status.
We will never use any techniques that would bother or harass the
insured. Top |
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11. |
Are the
proceeds from a life settlement taxable? |
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The proceeds
from a life settlement are generally tax free up to the amount of
premiums paid for the policy. The difference between that amount
and the cash surrender value is generally taxable as ordinary income.
Amounts received in excess of cash surrender value are generally
taxed as capital gain. We strongly encourage sellers to consult
their own tax and financial advisors before completing a transaction
so that they can determine the tax impact on them from the sale.
Top |
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12.
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Is it OK
to sell and buy life insurance policies? |
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Yes. Remember
that once a life insurance policy is issued and put in force, it
is the property of the contract owner. Much like any other asset,
the policy owner has the right to dispose of the policy in any manner
that he or she may choose after the contestability period has passed.
Options may include holding the policy until maturity, surrender
it for its cash value, lapsing the contract, or selling it for an
amount higher than the cash value, but less than the policy face
amount. Top |
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13. |
Does Parcside Equity LLC use institutional funding? |
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Yes. Parcside Equity LLC is proud to be among the few firms that use capital provided
by large institutional firms. Top |
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14. |
How does
Parcside Equity LLC and its institutional
funder handle the financial risks with this type of business? |
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We use actuarial
tables very similar to those used in the life insurance industry.
These tables have been formulated in order to use the actuarial
theory of the law of large numbers.This allows us to spread our
risk over a very large group of policies. Top |