menotellname
Joined: 15 Jul 2005
Posts: 8
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 Posted: Sat Jul 16, 2005 12:59 am Post subject: Re: cash value policy. |
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| on_way_to_fame wrote: | i read an article that said that term life insurance policies can be traded in for a cash value policy during a conversion period. My question is two-fold:
1. What is a cash value policy?
2. What if the insured persons health at the time of the conversion period is poor? Can they still trade in the policy? |
First, you are talking about a life settlement (do a Google search for the phrase "life settlement"). This is the secondary market for life insurance. This is very similar to the secondary market for mortgages where people refinance their mortgages, institutions pay for the opportunity to receive your mortgage payments via the new mortgage (in this case they are betting on the death benefit through the assignment of your life insurance policy),.
Please read this study from the Wharton school of business http://fic.wharton.upenn.edu/fic/papers/02/0241.pdf
To answer your questions:
1. Any policy that builds up cash value. These policies include: whole life, universal life, and variable universal life.
2. With a life settlement...the worse the insured's health...the greater the cash settlement offer. |
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