Who Is the Owner of a Life Settlement Contract

Life settlements, also known as senior settlements or viatical settlements, are becoming increasingly popular in the United States. A life settlement is a financial transaction in which a senior citizen, who no longer needs their life insurance policy, sells it to a third party for a lump sum of cash. In this article, we will discuss who the owner of a life settlement contract is.

In a life settlement transaction, the policyowner of the life insurance policy becomes the seller of the policy. The policyowner is the individual who owns the policy and pays the premiums on it. The policyowner is also the person who is entitled to the death benefit, which is the amount of money paid out to the beneficiary upon the policyowner’s death.

Once the policyowner decides to sell their life insurance policy, they will sign a life settlement contract with a life settlement provider. The life settlement provider becomes the new owner of the policy and assumes all financial responsibilities related to the policy. This includes paying the premiums, managing the policy, and collecting the death benefit when the policyowner passes away.

It is important to note that the life settlement provider does not become the beneficiary of the policy. Instead, the life settlement provider will typically sell the policy to a third party, such as a hedge fund or institutional investor. The third party then becomes the new beneficiary of the policy and will receive the death benefit upon the policyowner’s death.

In some cases, the policyowner may choose to sell only a portion of their policy, rather than the entire policy. In these situations, the policyowner remains the owner of the policy but receives a lump sum cash payment for the portion they sold. The life settlement provider then becomes the owner of the portion of the policy that was sold and assumes all financial responsibilities related to that portion of the policy.

In summary, the owner of a life settlement contract is typically the life settlement provider, who purchased the policy from the policyowner. However, if only a portion of the policy was sold, the policyowner retains ownership of the portion that was not sold. It is important for policyowners to carefully consider all options before selling their life insurance policy to ensure they fully understand who will be the owner of the policy once the transaction is complete.

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