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Debunking the Top 5 Myths About Life Settlements

Myth 1: Life settlements are illegal or unethical.

Contrary to common belief, life settlements are not only entirely legal but also ethically sound for policies issued in Quebec. Indeed, a life settlement offers policyholders a legitimate way to monetize their life insurance policy. However, this path to accessing a policy’s fair market value isn’t exclusive to Quebec. Canadian Life Settlements enhances financial possibilities for all Canadians with our Life Advances – an alternative non-recourse loan solution based on the policy’s death benefit.

These options provide a financial lifeline for all Canadians, offering them flexibility to meet immediate financial needs, receive regular income payments for life, or simply relieve the burden of premium payments, even while maintaining a portion of the death benefit for their estate.

Myth 2: Life settlements are only for the terminally ill.

While life settlements can indeed provide significant financial aid for those with terminal illnesses, they are not the exclusive beneficiaries. Seniors who may no longer need or afford their life insurance policies are also eligible for life settlements. In fact, if you are over 70 years old and have a policy with a death benefit of $100,000 or more, you may be eligible for a life settlement or life advance.

Myth 3: Selling your life insurance policy means losing all benefits and receiving little in return.

It is true that selling your life insurance policy relinquishes the death benefit, or a portion of it. However, in return, you receive a substantial cash payout that can be used for any purpose during your lifetime while removing the load of costly premiums. Importantly, the amount received in a life settlement is nearly always significantly higher than the policy’s cash surrender value, making it a worthy consideration for those who no longer need or can’t afford their policy.

Myth 4: You can’t sell term life insurance.

Life settlements are often associated with permanent life insurance policies like whole life or universal life. However, if you have a term life insurance policy that is convertible to permanent coverage, it is indeed possible for it to qualify for life settlements or advances.

Myth 5: The process of selling a life settlement is complicated.

The process may seem daunting due to some paperwork and a medical evaluation, but it is generally straightforward and manageable. At Canadian Life Settlements (CLS), the process is as follows:

  • Initial Vetting: Applicants provide contract and health information. CLS checks applicant’s age, health, policy type, and premium details.
  • Application Process: CLS requests preliminary data. If medical issues are present, additional forms are sent to collect related information.
  • CLS Review: CLS calculates life expectancy using actuarial methods and inputs data into the pricing model to determine a range of offers.
  • Offer: An offer is communicated to the policyholder or their financial advisor. A formal Offer to Purchase is sent via email if the verbal offer is accepted.
  • Acceptance of Offer and Closing: Signed documentation is collected and forms are completed for the change of beneficiary, ownership, or collateral assignment.
  • Funds Transfer: Once written verification is obtained, funds are transferred to the client, who confirms payment receipt and sends a signed confirmation to CLS.

Understanding the true landscape of life settlements is critical to unlocking the full value of your life insurance policy. Don’t let common misconceptions deprive you of the potential financial opportunities that your policy may provide. By demystifying these myths, we hope to equip you with the insights needed to make informed decisions about your future. Remember, your life insurance policy isn’t just a promise of a death benefit – it could be a vital financial resource during your lifetime. Empower yourself with knowledge, ask the right questions, and explore your options with confidence.

If you’d like to explore the potential value of your life insurance policy, please follow this LINK to complete our online valuation form, and we will provide you with an estimate of what your policy could be worth in a life settlement transaction.

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