In every life settlement case, a life expectancy calculation is done to determine the life expectancy of the insured. Life expectancy determines in most cases whether the life insurance policy is marketable for a life settlement and is also a major factor in determining the value of a policy.
To calculate a life expectancy, actuarial tables are used to estimate life expectancies based on population averages. Data points include marital status, smoking (past and present), alcohol consumption and other lifestyle choices. Also, as part of the process a medical underwriting is performed to asses an insured’s future health outlook. Combining the health assessment with actuarial table data can provide a reasonably accurate estimate of an insured’s life expectancy.
It is important to note the life expectancy calculation is anything but an exact science. However, the results of this process are extremely important to companies and investors considering the purchase of a life insurance policy. It maybe morbid but the shorter an insured’s life expectancy, the more viable a life settlement becomes and the policy more valuable.
Are you thinking about a life settlement? Call us for a no cost-no obligation analysis on whether a life settlement may be right for you.
Dan Penning
Life Settlements Specialist
Professional Life Settlements Plus
