Several people today may own term life insurance policies. or whole life insurance policies. However, they could be unaware of what this coverage may entail. It is helpful to know about the many parts of whatever life insurance policy you might be interested in, such as the controversial life insurance settlement. This is a specific legal practice allowed in some states where policyholder might potentially be able to redeem a life insurance policy for a cash amount more than the surrender value. This could be useful for people who want to change a life insurance policy that has matured into actual money.
Now, it is important to be wary if people you don’t know contact you and offer you some sort of incentive to buy their life insurance policy to be turned over for cash to investors; the Ohio Attorney General indicated that many cases like this could be illegal. A good example of this are term life insurance policies known as Stranger Originated Life Insurance or STOLI,, which lets you purchase a policy and choose investors who pay the annual or monthly premiums as beneficiaries. Morbid in concept and execution, STOLI may actually allow investors to make even more money if you die quicker. The Attorney General warns against this scheme where investors could not only have your policy, and that they may even also be able to access your personal and medical information with the right to sell that information when they want without asking. These actions could prevent you from being able to purchase whole and term life insurance policies at a later time and stop your potential eligibility for Medicaid. A general rule is that money you get from selling your policy is not legally protected and is taxable, and someone who performs a STOLI transaction can undergo a criminal investigation. To find out more about life insurance and taxation, visit our article “What are the tax benefits of life insurance?”
You should be well-informed about your term life insurance policy. Find out more by getting quotes for a term life insurance policy, fill out this quick-and-easy form to start the process.