Policy Values
Prior to the evolution of the life insurance secondary market, policy owners had only one option when they wanted to terminate a life insurance policy - either surrender the policy to the life insurance carrier in exchange for the policy’s cash surrender value - or let it lapse - that is, discontinue paying premiums on the policy and receive no value for it from the insurance carrier. Today, policy owners may enjoy a highly valuable alternate - a life settlement.
According to a recent industry survey, in a life settlement transaction the average policy owner receives 7 to 12 times the cash surrender value (CSV) of a policy.1 In many cases the CSV payable by the insurance carrier is $0; in such cases the increased value of a policy in a life settlement over the CSV is incalculable. Needless to say, it is significantly higher.
The following are some of the factors Peachtree Life Settlements considers when evaluating a policy to determine its value and marketability:
• Premiums required to maintain policy to maturity
• Current cash surrender value
• Outstanding policy loans
• Financial strength of the insurance company
• Life expectancy of the insured
• Current market interest rates
