Pro Tips: Life Insurance Stages
by Stephen Jass | May 14th, 2020
1) Primary Market
When a life insurance policy is purchased, this stage is a part of the Primary Market. This is traditionally the stage most policy owners know about, and they will continue to own a policy through the Primary Market and if no longer needed, or no longer affordable, will terminate the policy.
Expanding Life Insurance Stages
In 1911 the Supreme Court of the Unites States ruled that policy owners have the right to transfer the ownership of a life insurance policy. This effectively made life insurance an asset that could be bought and sold. At that moment two additional life insurance stages were created.
2) Secondary Market
When a policy owner decides to sell their life insurance, the policy enters the Secondary Market stage of life insurance. The transition from the Primary Market to the Secondary Market involves a transfer of value from a buyer to the policy owner (seller). This value can be in the form of a lump sum cash offer or as a Retained Benefit Offer (where the seller retains a portion of the policy).
When a policy enters the Secondary Market stage, the original policy owner from that purchased the policy in the Primary Market will typically no longer have any responsibility to pay any further premiums. The sale of a life insurance policy allows an owner in the Primary Market to obtain a fair market value for their asset, and get out of ongoing policy obligations.
3) Tertiary Market
The rights of a policy owner to sell a life insurance policy extends into the Secondary Market. These Secondary Market buyers may in the future look to sell the policy again in the third stage of life insurance, the Tertiary Market.
Similar to an owner in the Primary Market, the ongoing premiums and time horizon of a Secondary Market policy purchase may no longer be viable for the Secondary Market owner. They may no longer be interested in keeping the policy and can then re-sell the policy through the Tertiary Market. While this is not as common as a Secondary Market transaction, it shows the significant value of a policy owner having the right to sell a life insurance policy.
Conclusion
The ability to receive a fair market value offer for an existing life insurance policy asset is significant. When a policy has been paid into for many years, it is encouraging to realize this valuable option is available to policy owners. Working with Rapid Life Settlements, ensures your policy is distributed to a global network of buyers who will compete to provide the maximum offer.
Technology, the ability to electronically submit an application, 24/7 transparent access to the transaction, all of these things are revolutionizing the industry and making it a more attractive opportunity. However, at the end of the day it is most important how much a policy owner can receive, and maximizing offers is something Rapid Life Settlements excels at.
Stephen Jass is the Co-Founder and CEO at Rapid Life Settlements. He has spent years in the life insurance and life settlement industries and is now determined to make the life settlement process as fast, easy and simple as possible.
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