Found this interesting article, I thought I would share with everyone…

The Financial Services Authority (FSA) has warned that the marketing of traded life policies carry ‘major flaws’ and said it would be ‘very concerned’ to see the market increase rapidly.

Peter Smith, head of investment policy and conduct policy division at the FSA, told the European Life Settlement Association conference the regulator had ‘significant concerns’ about traded life settlements.

‘We do not see them as mainstream products…From our supervisory work we do have some significant concerns in the way these products are brought to the market at present,’ said Smith.

‘We have had to take action with a number of firms already and so we would be very concerned to see a rapid increase in the size of this market.’

Smith warned delegates that longevity risk, on which the price of traded life policies are calculated, is the largest risk the market faces. Read the rest of this entry »

Has the age range changed for a Life Settlement the past 1-2 years?

I would have to say yes, it has. The groups that are currently purchasing policies know that it is a buyers market and are cherry picking the best policies. In the recent years we saw seniors at the age of 65 or older actively getting offers on their policies, however in the last year it seems the main focus is over the age of 75.

However, depending on your current health conditions, that may play a factor. But we want consumers to know that younger seniors are struggling to get offers.

Call the help line at 1-888-823-7764, and we will let you know the potential of getting a Life Settlement offer…

Interesting piece, The Obama administration wants to impose new life settlement reporting rules and tighten the rules governing life settlement tax calculations.

Current Law
The seller of a life insurance contract generally must report as taxable income the difference between the amount received from the buyer and the adjusted basis in the contract, unless the buyer is a viatical settlement provider and the insured person is terminally or chronically ill.

Under a transfer-for-value rule, the buyer of a previously-issued life insurance contract who subsequently receives a death benefit generally is subject to tax on the difference between the death benefit received and the sum of the amount paid for the contract and premiums subsequently paid by the buyer. This rule does not apply if the buyer’s basis is determined in whole or in part by reference to the seller’s basis, nor does the rule apply if the buyer is the insured, a partner of the insured, a partnership in which the insured is a partner, or a corporation in which the insured is a shareholder or officer.

Persons engaged in a trade or business that make payments of premiums, compensations, remunerations, other fixed or determinable gains, profits and income, or certain other types of payments in the course of that trade or business to another person generally are required to report such payments of $600 or more to the IRS. However, reporting may not be required in some circumstances involving the purchase of a life insurance contract.

Reasons for Change
Recent years have seen a significant increase in the number and size of life settlement transactions, wherein individuals sell previously-issued life insurance contracts to investors. Compliance is sometimes hampered by a lack of information reporting. In addition, the current law exceptions to the transfer-for-value rule may give investors the ability to structure a transaction to avoid paying tax on the profit when the insured person dies.

Proposal
The proposal would require a person or entity who purchases an interest in an existing life insurance contract with a death benefit equal to or exceeding $500,000 to report the purchase price, the buyer’s and seller’s taxpayer identification numbers (TINs), and the issuer and policy number to the IRS, to the insurance company that issued the policy, and to the seller.

The proposal also would modify the transfer-for-value rule to ensure that exceptions to that rule would not apply to buyers of policies. Upon the payment of any policy benefits to the buyer, the insurance company would be required to report the gross benefit payment, the buyer’s TIN, and the insurance company’s estimate of the buyer’s basis to the IRS and to the payee.

The proposal would apply to sales or assignment of interests in life insurance policies and payments of death benefits for taxable years beginning after December 31, 2010.

Find complete info on page 69 on the report:
www.treas.gov/offices/tax-policy/library/greenbk10.pdf

More info coming to:
Life Settlement Tax