Retained Death Benefit

A Retained Death Benefit (RDB) is a type of Life Settlement where the policyholder sells a portion of their life insurance policy but retains a percentage of the original death benefit. This means that even after the policy is sold, beneficiaries are still guaranteed a payout upon the policyholder’s passing.

RDBs are an appealing option for policyholders who:

  • May not qualify for a traditional life settlement

  • Want to reduce or eliminate future premium payments

  • Wish to preserve a portion of their policy for loved ones

The amount retained can vary and is negotiable during the settlement process, providing flexibility based on individual needs. This retained portion offers peace of mind for those concerned about leaving their family without financial support. It balances accessing funds now and providing a future safety net.

Life Settlement - A woman looking at her phone while smiling. retained death benefit
AdobeStock_553163404

Policyholder

The owner of the life insurance policy who is terminally ill and decides to sell the policy.

optimize

Insured

The individual whose life is insured by the policy. In a viatical settlement, the insured is also the policyholder and is terminally ill.

AdobeStock_570062017

Buyer (Investor)

The third party that purchases the life insurance policy, assumes responsibility for premium payments, and receives the death benefit upon the insured’s death.

AdobeStock_474483371

Broker

A licensed intermediary who helps the policyholder find a buyer and negotiate the terms of the sale.

Age and Health Parameters

Life Expectancy (LE) Reports

Medical evaluations used to estimate the remaining lifespan of the insured, which helps in determining the policy’s value.

Eligibility Requirements for Retained Death Benefit

  • The policy must be permanent life insurance.
  • The policy must have a minimum face value of $100,000.
  • Some states require the policy to be in force for a certain term – usually two to five years.
  • No outstanding loans against the policy.
  • Premium payments must be up to date.
Life and Viatical Settlements - A woman walking with a doctor as the doctor talks. Requirements for Retained Death Benefits

Retained Death Benefit (RDB)

A Retained Death Benefit (RDB) is a life settlement option that allows a policy owner to retain a portion of their life insurance policy’s death benefit instead of receiving a full cash lump sum through a traditional life settlement.

This structure can be attractive for policyholders who no longer want to pay premiums but still wish to leave something behind for beneficiaries.

How a Retained Death Benefit Works

When an RDB offer is accepted:

  • The buyer assumes 100% of future premium payments

  • The policy owner has no further financial obligations

  • A guaranteed percentage of the death benefit is retained for the policy owner’s beneficiaries

  • The buyer receives the remaining portion of the death benefit

In other words, you eliminate premium payments while preserving a portion of the policy’s benefit.

We believe retained death benefits can offer financial relief for those who do not qualify for traditional life settlements.

Contact us to learn more about our services and find out if you’re eligible for a retained death benefit. Our team is here to help you make the best decision for your situation.

Immediate Financial Stability

Access a portion of the life insurance payout immediately for financial relief.

Flexibility

Choose the amount to retain, controlling what you receive upfront and what remains for beneficiaries. 

Two hands holding something black glyph icon. Free space for the premises of the object. Empty space between hands. Maternal care. Silhouette symbol on white space. Vector isolated illustration

Ceasing Premium Payments

The buyer takes over payments, relieving the policyholder of this obligation.  

Legacy Planning

Leave a legacy while using funds for current financial needs. 

 

Tax Benefits

Retained death benefits are typically tax-free. 

Risks of Retained Death Benefit 

AdobeStock_553163404

Reduced Coverage

RDB reduces overall coverage for beneficiaries, impacting financial security.

Lower Monthly Expenses

Potential for Higher Premiums

Retaining a portion may increase premiums to maintain coverage.

AdobeStock_567070641

Limited Options

RDB means giving up the lump sum payment option and limiting future options for beneficiaries.

CONSIDERATIONS BEFORE CHOOSING RETAINED DEATH BENEFIT

Opting for a retained death benefit can be appealing, but it’s important to consider all factors before deciding. The retained death benefit amount directly impacts the cash value in the settlement, so weigh this against your financial needs.

Consider the impact on beneficiaries too. Retaining part of the death benefit means they’ll receive less than the full amount. Open communication with beneficiaries is essential to ensure they’re aware of any changes in their future inheritance.

Retained death benefits in life settlements can offer financial security for loved ones while providing cash for the policyholder. It’s crucial to evaluate your needs and discuss this option with a financial advisor and your beneficiaries. By weighing the pros and cons, you can make an informed decision that fits your current and future financial goals.

Life Settlement - a son showing his senior Father something on an Ipad. CHOOSING RETAINED DEATH BENEFIT

WHY USE A LIFE SETTLEMENT BROKER?

Life Settlement Brokers have industry expertise, helping navigate the complexities of the Life Settlement Market. They guide policyholders, offering insights into trends, regulations, and potential offers. Their knowledge helps clients understand how factors like economic changes affect policy value.

Brokers have established relationships with various providers, increasing chances of competitive offers. This network is essential, matching policies with buyers for better financial outcomes.

As intermediaries, brokers negotiate to secure the best prices, understanding each policy’s true value and conveying it to buyers. This maximizes offers, ensuring policyholders receive fair deals.

Working with a broker saves time and money. They handle paperwork, negotiations, and legal compliance, letting policyholders focus on other priorities. Brokers are typically paid a commission from the final sale, meaning no upfront costs, making it a smart choice.

Life settlement brokers like Summit achieve the best outcomes for selling life insurance policies. Partner with a reputable broker to secure the highest offer for your policy. We provide transparent communication and support, ensuring you feel informed and comfortable throughout the process.

Contact Us today to unlock your life insurance policy’s value. Let Summit be your trusted partner in realizing its full potential and guiding you toward a brighter financial future. With our support, you can make decisions that align with your goals.

Summit Life Settlement

Initial Consultation and Evaluation

Consultation: The process begins with an initial consultation where the broker gathers information about the policyholder and the policy.
Evaluation: The broker performs a preliminary evaluation to determine if the policy is a good candidate for a life settlement.

Summit Life Settlement

Policy Review and Documentation

Document Collection: The broker collects necessary documents, including the policy, medical records, and any other relevant information.
Review and Analysis: A thorough review and analysis are conducted to assess the policy’s value and potential market interest.

Summit Life Settlement

Marketing and Bidding Process

Marketing: The broker markets the policy to a network of potential buyers.
Bidding: Buyers submit bids, and the broker facilitates a competitive bidding process to maximize the sale price.

Summit Life Settlement

Offer and Negotiation

Offer Presentation: The broker presents the highest offers to the policyholder.
Negotiation: The broker may negotiate with buyers to improve the offers.

Summit Life Settlement

Sale Agreement and Closing

Agreement: Once an offer is accepted, the broker assists in drafting and finalizing the sale agreement.
Closing Process: The closing process includes transferring ownership of the policy and disbursing the funds to the policyholder.

Summit Life Settlement

Overall Time Frame (6-12 weeks)

Total Duration: Through the Summit Life Marketplace, a process that normally takes months can be reduced to weeks. Our aim is to complete the transaction within 6 to 12 weeks. This timeline may vary based on the complexity of the policy, the responsiveness of the buyer, and the efficiency of the documentation.

HOW CAN SUMMIT LIFE SETTLEMENTS HELP?

A retained death benefit can be a valuable financial solution for individuals with a who may not qualify for a traditional life settlement. It allows policyholders to relieve themselves from future premium payments while keeping a smaller death benefit for their beneficiaries. At Summit Life Settlements, we understand the urgency of these situations and work closely with clients to ensure they receive the best offer for their retained death benefit.

Working with a reputable life settlement broker is crucial for getting the best offer for your policy. An experienced broker understands market dynamics and has connections to institutional buyers, ensuring competitive offers. We are dedicated to securing optimal offers and guiding you through every step. Our team provides all necessary information for you to make informed decisions about your policy.

At Summit Life Settlements, our secure Summit Life Marketplace platform connects policyholders with institutional buyers to increase demand and maximize policy value. We manage paperwork, negotiations, and legal requirements, allowing you to focus on what truly matters.

Our goal is to help individuals take control of their finances by exploring all life insurance options, whether through a traditional life settlement, a retained death benefit, or a viatical settlement. Our experts are available to answer questions and address concerns.

Join Summit Life Settlements today to achieve financial security and peace of mind. Let us be your partner in navigating settlement options and creating a brighter future for you and your loved ones. Contact us today to explore your options and unlock the full value of your life insurance policy for a more secure financial future.

Life settlement refers to the sale of one’s life insurance policy to a third-party for a one-time cash payment. The buyer takes over the premium payments and becomes the beneficiary for when the policyholder passes.

A retained death benefit allows the original policyholder to keep a portion of the death benefit after selling their life insurance policy. While the buyer becomes the new policy owner and pays premiums, your designated beneficiaries still receive a payout when you pass away.

During the life settlement negotiation, the policyholder agrees to sell their policy but retains a fixed percentage of the original death benefit. This amount is paid directly to their beneficiaries upon death, while the rest goes to the investor who purchased the policy.

In order to qualify, one must have a life insurance policy face value with a minimum $100,000 face value.

It’s ideal for policyholders who may not be eligible for a traditional life settlement. It allows them to get relief from premium payments while keeping a percentage of the death beneifit to leave something behind for their loved ones. This option provides both financial relief now and support later for beneficiaries.

The retained benefit is negotiable and often depends on factors such as the face value of the policy, health of the insured, and the investor’s offer. A broker can help structure a deal that balances cash payout and death benefit retention.

The process can vary, but the process can usually take between 6-8 weeks.

Yes. Since you’re keeping part of the death benefit, the cash portion of the settlement is typically lower. It’s a trade-off between current liquidity and future family support.

To be considered for a life settlement, the policy must meet standard criteria, including:

  • The insured is generally age 65+ or has a serious health condition

  • The policy has a death benefit of $100,000 or more

  • The policy is transferable, and ownership can be changed to a buyer

Once the policy is sold, the new owner (the investor) takes over premium payments. You no longer have any financial obligation to maintain the policy.