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Trying to figure out what to do with an old life insurance policy?

Updated: Sep 4

By Ted Kotsakis, CEO

PLUS Financial Network


Is that life insurance policy you bought years ago still serving a purpose now that you are retired or approaching retirement? If you are on a fixed income you might be more concerned with outliving your money than premature death. There is an alternative that many people are not aware of and it is called a “Life Settlement."


A life settlement is the sale of an existing life insurance policy to a third party for a value mutually agreed upon by both parties.

“Settlements provide cash relief for clients that no longer need or want existing policies,” says Noelle Kotsakis, CEO of Professional Life Settlements in Troy, Michigan.
She also states “if the insured has retired and no longer needs income replacement, a life settlement can help alleviate the cost of an unneeded policy and provide a cash benefit that can be used to cover expenses like healthcare in retirement.”

Case Study: Male, age 75, owned a $1,000,000 universal life policy that he purchased when he was 60. The annual premium he was paying was $15,000. The cash surrender value was $150,000. He had some minor health issues along the way. He was now on a fixed income and the $15,000 was beginning to be a burden. Further, he was more concerned with long term care instead of the death benefit. Rather than turning the policy back in to the life insurance company for the cash surrender value ($150,000) he elected to do a Life Settlement and received $248,000.

If House Bill Passes, Seniors May Get Tax-Free Life Settlements

New bipartisan legislation could go a long way toward helping seniors pay for late-life care through favorable tax changes, say officials with the Life Insurance Settlement Association.


The trade association is lobbying for the “Senior Health Planning Account Act,” introduced by Rep. Brian Higgins, D-NY, and Rep. Gregory Steube, R-Fla. The bill would allow seniors to sell their life insurance policies and use the proceeds, tax-free, to pay for their health care costs, said Bryan Nicholson, Executive Director of the Life Insurance Settlements Association.


Seniors are the only group of Americans who are not eligible for existing tax programs for contributing their own resources to help pay for health care. If passed into law, seniors will be able to roll over their life insurance settlement proceeds, tax-free, into Senior Health Planning Accounts, which would be dedicated to paying health care costs for themselves and their spouses.


The accounts would be exempt from federal income taxation, similar to existing federal tax programs that encourage younger working Americans to invest in their own health care.


The bill will increase awareness that life insurance policies are an asset that seniors don’t have to lapse or surrender back to insurance companies. Life settlement proceeds will provide billions of dollars of living benefits for seniors to use for their own health care.


With volatility in the stock market and increasing costs as it pertains to health care, now might be the time to review your existing life insurance coverage to see if a life settlement makes sense for you and your family.


Please email Bill Root with any questions you have about your policy.


#lifesettlement #planningforbrighttomorrows #taxfree #seniorhealthplanning

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©2018 Resch, Root, Philipps & Graham, LLC. All rights reserved. Disclaimer

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