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InsuranceAfter an Accident Insurance ClaimsMake the insurance claims process easier by following these steps.Am I Covered? Car Insurance QuestionsAsk your insurance agent these questions. It helps to understand the types and extent of coverage you have. There are a lot, but you're paying a lot.Appealing an Insurance SettlementIf you have a difference of opinion on your insurance settlement, you can begin an appeal process, starting with your agent, moving to the claims adjuster at your insurance company, or your state's watchdog agency for insurance consumers. What's Your Insurance Score?Like a credit score used by banks, insurance scores rate your risk (how financially stable you are). Research has shown that people who are in better shape credit-wise tend to file less insurance claims. Working With a Claims AdjusterOnce you have notified your insurance company of your loss, you will meet with a claims or field adjuster employed by the company. If You Have No InsuranceIf you have no insurance (or less insurance coverage than you thought), your recovery will be based on your own resources and help from friends, relatives and your community. Estimating Your Home's ValueDo you have enough insurance on your home to rebuild it if it is destroyed? Do you even know how to calculate the amount of insurance you need? Key Insurance Terms Determining ValueKnowing these terms helps to understand the process insurance agencies and relief organizations use to determine the value of your loss. Your tax accountant can also help you when claiming your losses. Top Homeowners Insurance MythsHomeowner's insurance can be a bit complicated. William S. Coffman, Jr., WHN's Guest Columnist, provides some common myths about insurance and insights into the realities of insurance and the claims process.Property Damage Questions for Your AgentThese are some questions to ask your insurance agent. These may confirm what you already know or may help you understand the extent and specifics of your coverage.Insurance Riders Do I Need One?You pay your homeowners premiums on time and feel reasonably comfortable that you are well covered should disaster ever strike, right? Wrong. Even if you think you have adequate coverage, you could be drastically underinsured.Life Insurance and Healthcare CostsIf you or someone you care about has been diagnosed with a serious illness, you may have already discovered that dealing with actual health issues is just part of the individual puzzle you must reassess and reassemble. Am I Covered? Home Insurance QuestionsThe more you know and understand about home insurance, the better you can insure yourself and your family in case of loss. Am I Covered? Life Insurance QuestionsHere is a 'starter' list of things to consider and questions to ask your agent. You'll probably come up with questions or ideas that best fit your needs. Choosing a Life Insurance BeneficiaryIf you own assets, from bank accounts to life insurance, it's important that you choose a beneficiary. Filing an Insurance ClaimA few tips on how to file a claim after a natural disaster, fire or theft. Motorcycle InsuranceThe more you know and understand about motorcycle insurance, accident coverage, and your own policy, the better off you are. Pet InsurancePet insurance is similar to health insurance: you may be reimbursed if the unexpected occurs. Property Damage What to Expect from Your AgentHere is a list of actions an insurance agent may follow after a claim. If you receive money from your agent or arrangements are being made for you, be sure to ask your agent what is covered under your policy and how much you are covered for. Reviewing and Updating Your Homeowner's InsuranceWhen was the last time you reviewed your home insurance policy? According to Loretta Worters, vice president of the Insurance Information Institute, there are six events that should trigger a review.Flood InsuranceOne of the most important things that you can do to protect your home and family before a flood is to purchase a flood insurance policy - even if you don't live in a flood-prone area. Earthquake Insurance ResourcesUseful links to information about disaster-related insurance resources.

Life Insurance and Healthcare Costs

By WHN's Guest Columnist, M. Bryan Freeman

If you or someone you care about has been diagnosed with a serious illness, you may have already discovered that dealing with actual health issues is just part of the individual puzzle you must reassess and reassemble. Financial challenges frequently accompany serious illness. A life settlement is an option you may want to consider.

What is a life settlement?

A life settlement is the sale to a third party of an existing life insurance policy for more than its cash surrender value but less than its net death benefit. Although life settlements are usually undertaken by relatively healthy seniors for financial and estate-planning reasons, people with serious illness also may qualify.

Here are answers to some of the most popular questions regarding life settlements:

How does this work?

When a life settlement is transacted, the buyer (known as the life settlement "provider") becomes the new owner of the life insurance policy, pays future premiums, and collects the death benefit when the insured dies.

The insured or owner of the policy stops paying premiums and all policy costs are assumed by the provider, for the lifetime of the insured individual.

This new policy owner pays a discounted amount – a percentage of the policy's face value – to the seller, which may range from a modest offer up to a significant portion of the policy's value.

Statistics from reports filed with some states indicate that the average runs between 12 percent and 25 percent of the face of the policy. It can run much higher in circumstances in which the insured is terminally ill with a short life expectancy.

What are my other options?

The discounted amount paid in a life settlement transaction is almost always higher than the cash surrender value (CSV) of a life policy (if the policy indeed has cash value).

Surrendering the policy for its cash value or transacting a life settlement is certainly a better option than "lapsing" a policy, which means it simply goes away, with no benefit to the policy owner and/or insured other than that they no longer have to pay premiums. (About 93 percent of policies are said to lapse, without a benefit ever being paid.)

An accelerated death benefit is another option, if your policy includes such. It pays some of the policy owner's death benefit before the insured dies. Not all policies offer such an option. When they do, you usually have to have a very short life expectancy to qualify.

An accelerated death benefit may be a good option for someone who wants to generate cash and still retain a portion of the policy's original death benefit payable to their heirs at a later date.

Some life settlement scenarios present a similar option, in which a policy is split, with one of the resulting policies being settled and the other being retained to benefit heirs.

I might not qualify?

Life settlements are based, by and large, on life expectancy. The shorter your life expectancy – due to age or illness of a combination of both – means a higher settlement amount.

If you do not qualify, it will most likely be because your life expectancy is considered normal.

You may not qualify for a life settlement because your policy – the type, age or rating – eliminates it from purchase criteria.

Most types of life policies do qualify for settlement.

What will my responsibilities be?

You will not be required to take a medical exam.

You will be asked to sign a release allowing the potential policy buyer to review your medical records.

You may be asked to provide proof that your policy is not encumbered by a divorce decree, bankruptcy or other personal circumstance.

Who might I involve?

Your insurance agent may be a source of settlement information.

You may deal with a life settlement broker.

You may be able to go directly to a life settlement provider (the purchaser).

You may want to consult with your own accountant, attorney or financial planner.

How can I spend my settlement?

The cash settlement you receive is not restricted.

You can use the settlement for anything: direct health care expenses, paying bills, alternative treatments, travel or anything else.

What is my tax liability?

Life settlements often carry tax implications (ordinary income and/or capital gains tax). Life settlements transacted by people with a life expectancy of 24 months or less may be eligible for tax-free treatment.

Speak with your legal and financial advisors for a thorough analysis before making any life settlement decision.

Although the life settlement company you deal with likely does not provide tax advice, they can often help you and your advisors better understand the process and its implications.

What will this cost me?

You should not be required to pay a fee for a life settlement.

The company that purchases your policy absorbs that cost and remunerates anyone involved, like a broker, in accordance with prevailing laws and regulations.

If you decide not to accept a settlement offer, you should owe nothing.

What are some precautions and safeguards?

Ask yourself: Do I still need the life coverage I am considering selling? If so, a life settlement may not be for you.

Proceed with caution when making ANY major financial decision.

Understand beforehand if you are eligible for future life insurance coverage.

Receiving any lump sum of cash may affect other benefits you receive; keep this in mind when considering a life settlement or any other transaction that generates an influx of cash.

All parties to a settlement should be appropriately licensed, as applicable and appropriate. Check with your state insurance department to ensure if various life settlement entities are licensed. (As implied here: Life settlement licensing is handled on a state, rather than federal, level.)

You should deal with companies who are members of the Life Insurance Settlement Association; (LISA) is the oldest and largest non-profit life settlement industry group and membership therein demonstrates a willingness to invest in the industry and to strive for high standards and responsible regulation.

It also should be stressed that the independent tax, financial planning and legal advisors to whom a consumer turns for settlement advice should themselves be knowledgeable about the settlement process.

Precautions are taken so that investors in policies that are subject to a life settlement do not know your identity. Thus, a settlement should not put you in danger.

Individual investment in life settlements is not appropriate for most people and should be undertaken only by sophisticated investors who have advanced knowledge of settlements and enough assets to adequately diversify.

If your health challenges have you looking for financial solutions, a life settlement may be an option for you. Educate yourself about the process so you can make the best decision for your individual circumstances.

M. Bryan Freeman, a licensed insurance agent for 28 years, is founder and president of Habersham Funding LLC, an Atlanta-based life settlement provider that does business nationally.

The information provided here is not meant to be a substitute for professional insurance or legal advice. Always check with a financial, legal, tax, or other advisor before making any insurance policy changes.

InsuranceAfter an Accident Insurance ClaimsMake the insurance claims process easier by following these steps.Am I Covered? Car Insurance QuestionsAsk your insurance agent these questions. It helps to understand the types and extent of coverage you have. There are a lot, but you're paying a lot.Appealing an Insurance SettlementIf you have a difference of opinion on your insurance settlement, you can begin an appeal process, starting with your agent, moving to the claims adjuster at your insurance company, or your state's watchdog agency for insurance consumers. What's Your Insurance Score?Like a credit score used by banks, insurance scores rate your risk (how financially stable you are). Research has shown that people who are in better shape credit-wise tend to file less insurance claims. Working With a Claims AdjusterOnce you have notified your insurance company of your loss, you will meet with a claims or field adjuster employed by the company. If You Have No InsuranceIf you have no insurance (or less insurance coverage than you thought), your recovery will be based on your own resources and help from friends, relatives and your community. Estimating Your Home's ValueDo you have enough insurance on your home to rebuild it if it is destroyed? Do you even know how to calculate the amount of insurance you need? Key Insurance Terms Determining ValueKnowing these terms helps to understand the process insurance agencies and relief organizations use to determine the value of your loss. Your tax accountant can also help you when claiming your losses. Top Homeowners Insurance MythsHomeowner's insurance can be a bit complicated. William S. Coffman, Jr., WHN's Guest Columnist, provides some common myths about insurance and insights into the realities of insurance and the claims process.Property Damage Questions for Your AgentThese are some questions to ask your insurance agent. These may confirm what you already know or may help you understand the extent and specifics of your coverage.Insurance Riders Do I Need One?You pay your homeowners premiums on time and feel reasonably comfortable that you are well covered should disaster ever strike, right? Wrong. Even if you think you have adequate coverage, you could be drastically underinsured.Life Insurance and Healthcare CostsIf you or someone you care about has been diagnosed with a serious illness, you may have already discovered that dealing with actual health issues is just part of the individual puzzle you must reassess and reassemble. Am I Covered? Home Insurance QuestionsThe more you know and understand about home insurance, the better you can insure yourself and your family in case of loss. Am I Covered? Life Insurance QuestionsHere is a 'starter' list of things to consider and questions to ask your agent. You'll probably come up with questions or ideas that best fit your needs. Choosing a Life Insurance BeneficiaryIf you own assets, from bank accounts to life insurance, it's important that you choose a beneficiary. Filing an Insurance ClaimA few tips on how to file a claim after a natural disaster, fire or theft. Motorcycle InsuranceThe more you know and understand about motorcycle insurance, accident coverage, and your own policy, the better off you are. Pet InsurancePet insurance is similar to health insurance: you may be reimbursed if the unexpected occurs. Property Damage What to Expect from Your AgentHere is a list of actions an insurance agent may follow after a claim. If you receive money from your agent or arrangements are being made for you, be sure to ask your agent what is covered under your policy and how much you are covered for. Reviewing and Updating Your Homeowner's InsuranceWhen was the last time you reviewed your home insurance policy? According to Loretta Worters, vice president of the Insurance Information Institute, there are six events that should trigger a review.Flood InsuranceOne of the most important things that you can do to protect your home and family before a flood is to purchase a flood insurance policy - even if you don't live in a flood-prone area. Earthquake Insurance ResourcesUseful links to information about disaster-related insurance resources.