Hours 4

AL-Settlement Income Tax Issues

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Lessons

AL-Settlement Income Tax Issues Chapter 2

Accelerated Death Benefits In response to the growing secondary market for life insurance policies covering terminally ill insureds, many life insurers began offering—and continue to offer—accelerated death benefits. Accelerated death…

AL-Settlement Income Tax Issues Chapter 3

Monopsony Curtailed Before a secondary market for life insurance policies developed, a life insurance policy owned by an insured seeking cash could only be surrendered for its cash surrender value.…

AL-Settlement Income Tax Issues Chapter 4

New Lexicon The secondary market for life insurance policies has resulted in a number of new terms to describe the players and the transactions. In this subsection, we will look…

AL-Settlement Income Tax Issues Chapter 5

The Decision to Terminate a Life Insurance Policy Generally speaking, a policyowner’s decision to terminate an in-force life insurance policy stems from one of the following: The owner perceives that…

AL-Settlement Income Tax Issues Chapter 6

Purpose of Review The purpose of the settlement provider’s review is twofold: To determine the financial viability of the proposed life insurance policy purchase To ensure that fraud is not…

AL-Settlement Income Tax Issues Chapter 7

Market Conduct The appropriate market conduct of individuals and organizations in the business of transacting viatical and life settlements enables a policyowner considering such a settlement to make a fully…

AL-Settlement Income Tax Issues Chapter 8

Suitability The need for suitability in the recommendation of a financial transaction has long been a requirement for transactions that involve securities products. Accordingly, the NASD (now FINRA) issued a…

AL-Settlement Income Tax Issues Chapter 9

Policy Loans and Withdrawals A policy loan generally permits the policyowner to borrow up to 100 percent of the policy’s cash surrender value. The exception to this general rule applies…

AL-Settlement Income Tax Issues Chapter 10

Tax-Free Exchanges Thus far, we have examined the alternatives to the sale of an existing in-force life insurance policy in the secondary market when the policyowner’s reason for the sale…

AL-Settlement Income Tax Issues Chapter 11

Insured and Viator Confidentiality As examined earlier in the discussion of the application step in the life settlement process, viators are expected to provide or authorize the disclosure of a…

AL-Settlement Income Tax Issues Chapter 12

Disclosures of Certain Rights In addition to the disclosure of factors that may be of possible concern to a viaticating policyowner, the Model Act also requires disclosure at the time…

AL-Settlement Income Tax Issues Chapter 13

Taxation of Life Insurance Living Proceeds Living proceeds received under a life insurance policy are generally defined as amounts received during the insured’s lifetime. As such, living proceeds include: Policy…