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Maine.gov > PFR Home > Insurance Regulation > Consumer Information > All Brochures > Life Settlements Brochure
Click the following link for a printer friendly version of the Life Settlement Brochure.
Important information about your life insurance policy
Life insurance is a critical part of a broader financial plan. There are many options available, and you have the right to shop around and seek advice from different financial advisers in order to find the option best suited to your needs.
These options may or may not be available depending on your circumstances and the terms of your life insurance policy. Please see your policy or contact your life insurance company, financial adviser, agent, or broker to determine your particular options.
IMPORTANT INFORMATION: Maine law requires life settlement brokers to have a proper license. If you are approached to sell your policy or if you are looking to sell your policy, please check with the Maine Bureau of Insurance for a list of licensed life insurance producers.
If you are a Maine resident and have questions about life insurance and your rights, contact the Maine Bureau of Insurance at 1-800-300-5000, or go to www.maine.gov/pfr/insurance. Ask questions if you don’t understand your policy.
COMMONLY USED TERMS
Accelerated death benefit: A benefit allowing terminally ill or chronically ill life insurance policyholders to receive cash advances of all or part of the expected death benefit. The accelerated death benefit can be used for health care treatments or any other purpose.
Cash surrender value: This term is also called “cash value,” “surrender value,” and “policyholder’s equity.” The amount of cash due to a policyholder who cancels his or her life insurance policy before it matures or death occurs.
Expected death benefit: The amount that the insurance company would pay the beneficiaries named in the life insurance policy if the insured died today.
Face amount: The death benefit the insurer is required to pay the beneficiaries named in the life insurance policy upon the death of the insured, as stated in the policy. The actual death benefit may differ due to such factors as policy loans, failure to pay premiums, and for some types of policies, investment performance.
Lapse: Refers to a life insurance policy ending or expiring when a policyholder stops making premium payments.
Life settlement: A contract in which the policyholder sells his or her life insurance policy to a third party for a payment that is less than the expected death benefit of the policy. Life settlements include viatical settlements, defined below.
Policy loan: A loan issued by an insurance company using the cash value of a person’s life insurance policy as collateral.
Viatical settlement: An arrangement in which someone with a terminal illness sells his or her life insurance policy at an amount less than the death benefit. The ill person receives cash, and the buyer receives the full amount of the death benefit. This death benefit is payable once the former policyholder dies.
This brochure is for informational purposes only and does not constitute an endorsement of any of the options described above.
Last Updated: September 27, 2010
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