An Overview of Life Insurance Policies and the Decisions to Be Made

Many people feel like they should have a life insurance policy but are a bit confused about them. They have questions like: do they even need a policy, what type of policies are available, and how much coverage should you include on your policy. These questions are valid points and we will take a look at each one of them to help try and clear them up for you.

The first question about whether you actually need a policy is a good question. The answer is that it depends on your circumstances. For example if you are single, in your early 20’s and have no dependents then the answer is “not really.” Under this type of situation you can wait a few years before buying a policy or until your situation changes.

Once you have dependents however, the answer becomes “yes.” Life insurance is a way to guarantee that your spouse or child could continue to live they way you had planned in the event of your death. So once you decide to marry and/or have children it becomes important to protect their futures. So what type of life insurance policy should you get?

There are actually two types of policies to choose from. One is whole life and the other is term life. Whole life is a policy that will cover you from the time your policy is written until your death. This type of policy is generally more expensive because the insurance company knows that eventually they are going to have to pay out. Term life however is set for a specific amount of time. These policies can be for 10, 20, or even 25 years. They are less expensive as the insurance company is playing the odds that you will outlive the policy.

Determining how much insurance you need is very important. What you want to take a look at is your current situation and then leave room for changes. For example you want to make sure that your spouse can keep up with all your current financial obligations for at least 10 years. This helps to keep the surviving spouse from having to make any drastic changes and allows them to keep all the plans that you have made together. These things could include sending your kids to college, paying off the mortgage, or perhaps your spouse does not work and this type of financial backing would give them time to attend school, get a degree and a good career before having to worry about money.

When you enter a place in life when other people are depending on your for support and their livelihood it is time to seriously consider getting a life insurance policy. Having the right policy with the right amount of coverage are two of the most important aspect when choosing your policy. Sit down with your spouse and take a serious look at your financial situation and how it would be for the next 10 years and use that information to choose the right life insurance policy for you and your family.

The Latest Scare: Have You Checked On Your Life Insurance Policy Lately?

This little scheme involves “investors,” which in reality are complete strangers, meeting an elderly person and talking them into taking out a life insurance policy and then naming the “investor” as the beneficiary. The insured individual on the policy, or more accurately, the victim, usually receives a relatively small cash payment as consideration for naming the schemer as beneficiary.

So prevalent has this become that it has taken on its own moniker, STOLI, which stands for STranger Oriented Life Insurance. Not to be confused with a popular vodka brand.

But I digress. With a STOLI scam, the insurance policies in question aren’t term life insurance policies. Although it is possible to use term life, most STOLI “investors” prefer to use permanent insurance policies like whole or universal life insurance because these usually contain a guaranteed payout with few stipulations. STOLI scammers love to target the elderly whom are generally assumed to be most likely to die in a fairly short period. The problem here is that someone stands to gain upon the death of someone else without any sort of real relationship to get in the way. Basically, there are ghoulish “investors” standing around, hoping for the swift deaths of their “investments.”

So, you might ask, What’s wrong with the picture?” The real idea behind life insurance is that an insured’s beneficiaries or loved one’s, who would suffer financial and emotional distress upon losing a loved one, will be financially taken care of upon their death.

Generally, most families aren’t going to sit by their mom and dad’s death bed counting down the clock and wishing the old folks would up and die to get their hands on a life insurance check. That is why life insurance works so well. There has always been that balance. With term life insurance it is even more of a factor since a beneficiary receives nothing unless the insured dies within the term period. A STOLI scam, however, involves “investors” with no emotional interest in the person insured by the policy. Their interest is 100% financial in nature and they will only gain when the person dies. They lose nothing when the person dies, unlike the loss that most people experience upon the death of a beloved.

Sadly, most of these STOLI “clients,” or more accurately, victims, are the elderly. The unscrupulous investor usually pays nothing more than a token amount to the victim compared to the value of the death benefit on the policy, with full knowledge that they are going to reap an inordinate profit once the insured person dies. Now, the investors do also pay the remaining life insurance premiums, but that is nothing more than a thin pretense of having an insurable interest in the insured since their relationship only extends to the matter of the insurance policy.

Let me ask you, do you relish the thought of a complete stranger waiting at your loved ones’ death bed, crossing their fingers and waiting for a swift demise? When it comes time for our moms and dads to pass away, I believe we want to know that the people around them are supportive and encouraging and have nothing but their well-being in mind. Talk to your elderly loved ones about this article, and make sure you know the beneficiaries on the policy.

Converting An Unwanted Life Insurance Policy Into Ca$h

Do You Own A Life Insurance Policy That You No longer Need or Want?
It is possible that you may be able to can get a CASH settlement in excess of the
current cash surrender value by selling your policy in the secondary market to an

Reasons To “Sell” A Policy:

Family Situations


Estate Reduction

Estate Tax Revision

Business Was Sold

1035 Exchange

Drain On Income

Divorce – Separation

Death of A Spouse


Declining Health

Non-Performing Policy

Wealth Planning

Work Related Changes

Qualifying Types Of Life Insurance:


Whole Life

Term (Convertible)




Key Man (business related)

Who Is A Qualified Candidate?

Mature men and women over age sixty-five years of age who have an existing life
insurance policy and whose circumstances have changed since purchasing the policy
originally may qualify for a purchase and sale of their policy. Financial advisors view
this as a powerful and innovative wealth and estate planning tool.

How Much Is A Policy Worth?

There are a number of variables that determine the offered amount for a policy,
including the following;

* Age (of course) * Premium cost

* Client’s Health * Type of Insurance

* Death Benefit * Insurer Rating

* State of Residence *Underwriting criteria

Note: As a general rule the most heavily weighted items are the age of the insured
(the younger a person is a lesser current value will apply), the health condition, and
the amount of the premiums that apply are the primary determinants in arriving at
the price offered for a policy.

What benefits are there for the insured?

First – there is absolutely no cost for a policy appraisal

Offers liquidity to clients

Eliminates the insured having to pay premiums

Funding for ‘Alternative’ products that fit current needs

Offers an innovative and better solution for current status

Provides another alternative for divesting policies that are no longer needed or
(As opposed to letting policies lapse or accepting the cash surrender value
established by the originating life insurance company.)

How Does selling A Policy Work?

1. Policy owner (or professional financial advisor) requests and authorizes a policy

2. Policy buyer obtains needed documentation, including policy information and
physician statements, etc.

The highest possible offer is obtained in the secondary market.

The offer is submitted to the insured for acceptance.

If accepted, a contract is sent for signatures.

The change of ownership is completed and funds are released to the previous owner
(usually the insured).