| As the life settlement market grows, more and | | | | and considered to determine a possible return to |
| more people interested in potentially selling a life | | | | the investor. Once compiled, this information lands |
| insurance policy are familiarizing themselves with | | | | on the desks of multiple providers working with |
| this burgeoning market. How much a policy might | | | | investors. Once an offer is made, MP Hanley |
| be worth on the secondary market, taxation | | | | negotiates with the top offers to secure a |
| issues, and how long the process itself might take | | | | maximum payout for our client.life insurance policy |
| are just a few of the questions on the table for | | | | Tax issues concerning a life settlement are, shall |
| many. The answers, while not set in stone, do | | | | we say, not for beginners. In other words, consult |
| evolve from a set of variables one can expect to | | | | your tax professional immediately upon beginning |
| experience along the way. MP Hanley and | | | | the process. Generally speaking the taxable |
| Associates is happy to share those variables with | | | | income may be the difference between the |
| you in order to keep the surprises to a minimum. | | | | settlement amount minus the cost basis of the |
| There are many factors an institutional investor | | | | policy. The difference between the settlement |
| will consider in determining the value of your life | | | | amount and the cash surrender value may also |
| insurance policy. The face amount of your policy, | | | | be treated as a capital gain in certain |
| the accumulated cash value (if any), life | | | | circumstances. This is just the tip of the iceberg, |
| expectancy, and the minimum premium required | | | | and taxation is definitely an area where you?ll |
| moving forward are all examined and considered | | | | want all your bases covered. That said, keep your |
| before a cash determination is made. As such the | | | | tax professional close at hand. |
| settlement process can take a while ? usually | | | | Understanding the life settlement process prior to |
| between 90 to 120 days. The process itself | | | | becoming involved in it will reduce stress greatly |
| usually follows a familiar pattern. An insured?s | | | | as the process unfolds. Don?t be afraid to ask |
| medical history is consolidated and studied by an | | | | questions. A working knowledge of the process is |
| actuarial firm to determine life expectancy. At the | | | | the only true way to decide if the secondary |
| same time financial models are being constructed | | | | market is the place for you. |