NO OUT-OF-POCKET LIFE INSURANCE PROGRAMS
I’ve been looking for cheap insurance for the past few months. But FREE insurance is even better! Unfortunately, I don’t qualify, but for those that do, there are some great programs out there. Here’s some info. If anyone is interested in more info, send me an email and I’ll hook you up with the insurance agent.
Who is Eligible?If you found this post helpful, consider donating to my coffee fund!Seniors aged 70 to 80 (in some cases 68 up to 85) who meet ALL the following:
* Minimum net worth of at least $1,500,000 – (includes residence and all assets)
* In good or reasonably good health (no terminal illnesses)
* Currently uninsured or vastly underinsured in relation to net worthHow Does it Work?
If the insured qualifies, then usually this program funds the premiums for the first two years of a life insurance policy based on insured’s net worth. Should the insured pass away during the first two years the insured’s beneficiaries are entitled to the full face amount of the policy less premiums paid out and interest. There are never any fees or costs to the insured in any way at any time.
Example (insured passes away 18 months into the policy on a 2M policy. Heirs receive 2M less premiums and interest estimated at ~$200,000 leaving heirs with $1,800,000.)
After two years the insured has the option to continue paying the premiums and repay the loan (usually only done if the insured becomes terminally ill and it makes economic sense to the heirs). Or, the policy is sold on the secondary market by the lender(s). In most cases it is sold for above and beyond the premiums and interest already paid. In this case, the profits are split 50/50 with the insured and lender(s). Insured’s profit is expected at anywhere of 1-5% of the face policy.
The collateral for the loan is solely the insurance policy and is completely NON-recourse to the insured. Should the policy later be unable to be sold the insured is under NO obligation to repay any premiums or fees and the lender(s) take the loss.
Why does this work?
This program works as a win-win for the insured and the insured’s heirs as a result of several factors. After two years these policies are able to be sold on the secondary life settlement market for at least what the premiums paid out are for the following reason(s):
Premiums on life policies are currently very low due to high competition among insurance companies and the fact that many policies lapse or insured(s) fail to pay the premiums and the insurance company keeps all the previously paid premiums. Because of this high lapse rate and competition, the premiums are kept low. This may end soon and premiums will rise and this program will end, giving reason to lock in this program now!
Insurance companies are risk adverse and need to balance out their portfolios (meaning a Company may need 75 year olds and be willing to offer preferred rates to 75year-old’s to balance out their portfolios of non-75 year-old’s) companies are willing to offer preferred or standard rates to someone that really should not receive this preferential rate. The investors on the secondary market will pay top dollar for a policy written on someone in this scenario.
Many seniors over 70 develop illnesses after two years and/or their health deteriorates over time. These policies become more valuable to the life settlement market which means it can be sold at a profit!
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