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Sell Life Annuity Payments with or without Life Insurance

Sell Life Annuity Payments - Do You Need Life Insurance?

I hear many people ask: “I want to sell life annuity payments, but some factoring companies tell me they must buy life insurance while others say they can buy my payments without life insurance. Who’s telling the truth, and why is there a difference?” Well, the truth is both scenarios may be an option depending upon your circumstance.

For the sake of brevity, we generally refer to life contingent annuity payments as life annuity payments or life annuity.

Image of life insurance documents on clipboard next to pen and cash, shown on Sell Life Annuity section.

Sell Life Contingent Annuity Payments with Life Insurance or Self-Insurance

The phrase “life contingent” means that your annuity payments will stop when you pass. In order for us to buy these payments there are two options.

1. Factor Financial can help you obtain a life insurance policy to cover the risk of buying life contingent annuity payments in case you pass away.

2. Factor Financial can self-insure your payments by simply giving you less money at a higher discount rate to account for the additional risk involved. Self-insured simply means proceeding with the transaction without acquiring a traditional life insurance policy.

Which Is Better?

Each person’s life annuity payments and circumstances are different. The experts at Factor Financial will customize a transaction that best suits your situation. Generally, you’ll receive more money and a better exchange by getting a traditional life insurance policy. Here are some things to know:

  • Using a life insurance policy allows us to offer a lower discount rate to sell life annuity payments, which equals more money for you.

  • Having a life insurance policy allows you to choose a beneficiary (children, relatives, spouse). They will be in “second position” behind the investor. Any excess death benefit will be paid to the beneficiary you chose after the investor has been paid off and made whole via collateral assignment of the life insurance policy.

  • On some smaller cases for healthy individuals, we can often obtain life insurance without requiring a medical exam. For larger or special cases a medical exam will be necessary.

Sell Life Annuity Payments with or without Life Insurance – Pros and Cons

Beneficiary PossibleBest Rate / More MoneyQuicker ProcessMedical Exam Required Sell Far Away Payments
With Life InsuranceYesYesNoDependsYes
Without Life InsuranceNoNoYesDependsNo
With
Life
Insurance
Beneficiary
Possible		Yes
Best Rate/
More Money		Yes
Quicker
Process		No
Medical Exam
Required		Depends
Sell Far Away
Payments		Yes
Without
Life
Insurance
Beneficiary
Possible		No
Best Rate/
More Money		No
Quicker
Process		Yes
Medical Exam
Required		Depends
Sell Far Away
Payments		No

Doesn’t Life Insurance Cost Money? Wouldn’t I Receive More Money Without It?

Life insurance increases the value of your life annuity payments as it reduces the risk for the investor. We build everything into your transaction including attorney and court costs. You’ll always know the exact amount you’ll receive in the end. Life insurance isn’t free but will almost always give you more money than by trying to sell life annuity payments without it aka self-insurance. Here’s an example:

Jeremy is 40 years old and has monthly life annuity payments of $1,000 starting July 2024. He plans to sell 10 years (120 months) of his annuity payments.

Jeremy’s Transaction
with Life Insurance

  • Present value of payments at 13%: $39,000

  • Insurance cost: -$10,000

  • Jeremy receives: $29,000

  • Net discount rate: 15%

Jeremy’s Transaction
without Life Insurance (Self-insured)

  • Present value of payments at 19%: $17,800

  • Insurance cost: $0

  • Jeremy receives: $17,800

  • Net discount rate: 19%

The illustration above is only an example. The value and rates will be different for each case, but you can clearly see that Jeremy could receive over $11,000 more with life insurance than he would if he tried to sell life annuity payments without it. Additionally, he gets the benefit of choosing a beneficiary on his life insurance policy. If Jeremy were to pass, the beneficiary he chose would be paid any money left over from the death benefit after the investor has been made whole on his investment. If Jeremy decided to sell without any life insurance, aka self-insurance, there wouldn’t be any beneficiary

Why Do Some Companies Only Want to Buy My Annuity Payments without Life Insurance?

Some factoring companies encourage people to sell life annuities without life insurance. Their reasons can include any or all of the following:

  • Many companies don’t have a properly trained team to structure the sale of life annuity payments. They’re content with simply charging a much higher discount rate and self-insuring the transaction. They’d prefer not to go through the hassle of acquiring life insurance for the annuitant.

  • Many companies simply don’t’ have relationships with life insurance companies that can offer the right coverage for those trying to sell life annuities.

  • Factor Financial maintains a diverse network of funding sources. This gives us several options to give you the most money for life annuity payments. We actively manage our relationships with life insurance companies that provide us with the best pricing.

Sell Life Annuity Payments Without Insurance?

If you want to sell life annuity payments that are paying out right now or start up in the next couple years, then the difference in value may not be as significant and the entire process may be completed a bit quicker. Each case is different. Some people are willing to accept less money in favor of an easier process. Other people may have unique situations which don’t qualify for standard life insurance.

Will I Need to Take a Medical Exam if I Sell Life Annuity Payments?

With Life Insurance:

Usually, yes. However, in some smaller cases for healthy people, life insurance can be issued without taking a medical exam. When life insurance is offered without an exam, it’s called Simplified Issue. There will be a detailed phone interview, and the life insurance company will access your medical records to verify the information you give in your interview. If an exam is required, we use friendly examiners who will work around your schedule.

Without Life Insurance:

It varies. In order to sell life annuity payments without insurance, it’s usually necessary to have an organization perform a “life expectancy report” on you. Sometimes a medical exam will be needed. Whether the exam is required will often depend on your age and medical history.

What if I Don’t Qualify for Life Insurance?

Learn more about the process to Sell Life Annuity Payments – Life Insurance. Factor Financial has been able to obtain life insurance coverage for people with complex cases. We’ve also insured others who live outside the United States. If it’s possible, then we’ll find a way. If your circumstances or health make it not viable, then we may be able to self-insure the transaction.

Sell Life Annuity Payments with Life Insurance

Get Life Insurance to Sell Life Annuity Payments

If you’d like to sell life annuity payments, you should be willing to get a life insurance policy to protect the transaction. The amount of insurance we request is based upon an amount that will protect an investor’s investment. Accordingly, it'll last for the duration of the term of annuity payments one wishes to sell.

Fill Out a Preliminary Life Insurance Questionnaire

The first step in getting a life insurance policy is to request a quote from a life insurance agent. In order for us to get a quote you’ll be asked to fill out a simple preliminary questionnaire that will ask a few basic health questions. Once the form is completed, we send it to the life insurance agent we work with. Subsequently, he or she will respond to our request, usually within 1 to 2 business days.

We'll Determine if You Can Sell Life Annuity Payments to Us

Once we receive the quote back from the agent, we’ll be able to determine whether or not we’re able to buy your life annuity. Consequently, if we’re able to proceed we’ll instruct the life insurance agent to fill out a formal life insurance application directly with you. Many of the questions will have already been answered on the preliminary form. He or she will go over each one with you.

Life Insurance Application and Paramed Exam

You'll need to fill out the life insurance application, sign it and mail it back to the life insurance agent. Occasionally, some life insurance companies offer policies without requiring a medical exam. This is typically only for quite young individuals that are deemed height/weight proportionate and healthy based on the questions they answered. Otherwise, once the insurance company receives the application, they will set up a paramed exam for you. A paramed is a basic medical exam that may include any or all of the following:

  • Blood Pressure Test

  • Blood Test

  • Measure Height/Weight

  • Urine Test

Underwriter for the Insurance Company Will Make a Decision

The nurse that took the medical exam will then send the blood and urine samples along with the data collected from the blood pressure test and height/weight measurements to a laboratory for testing. The results of the test are sent to the underwriter that works for the insurance company. The underwriter’s job is to determine how much risk is involved in insuring you and to ultimately decide whether or not it’s a good decision to insure you for the term requested. Ultimately, the underwriter may approve or deny the application based on the information collected and the amount of coverage being requested. Furthermore, the entire process can take between 3 to 6 weeks during which time we'd be working on the court process of buying the life annuity.

We’d Love to Hear from You

If you want to sell life contingent annuity payments from a structured settlement, the team at Factor Financial is ready to help!

Receive a free analysis to sell life contingent annuity payments by calling us at +1 (781) 242-4000. If you prefer you may contact us by filling out the form to the right.

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