For growing numbers of consumers, a life insurance policy has more value than they may realize.

According to a recent Wall Street Journal article, the sale of life insurance policies has become a new investment phenomenon. It is attracting the attention of people over 65 who own high-value insurance policies with escalating premiums.

The Sept. 21 article, titled "Selling Your Life Insurance to a Stranger", describes how many life insurance policyholders feel the value of the policy does not justify what can be a formidable cost to maintain them. Yet these policyholders dont want to let their policies lapse and receive nothing after investing thousands of dollars in them.

The life settlement process allows policy sellers to transfer their policies to a buyer who is then named as the beneficiary. The buyer pays the seller a percentage of the policys face value and continues to pay the premiums until the seller dies, at which point the buyer collects on the policy. The amount paid by the buyer is based on the age and medical condition of the seller and the face value of the policy.

With the blessing of the insurance industry and state regulators, many investment firms now specialize in the purchase of these policies, offering sellers a percentage of the policys face value. That is where certified cash-flow consultants come in. Such consultants can help sellers find those investment firms and negotiate the best price for the sellers.

Certified cash flow consultants, thanks to the training they have received from the American Cash Flow Institute, are able to assist in the sale of these policies. In addition to fully understanding the sales process, these consultants have access to many funding sources that sellers and even insurance agents may not be aware of, companies that specialize in the purchase of insurance policies.

Names and contact information for certified cash-flow consultants are available at the American Cash Flow Web site (http://www.americancashflow.com), where visitors can look up the names of consultants living in their area.

Life settlements are a new version of a well-established practice in the insurance industry known as "viatical settlements". Terminally ill policyholders of any age who may want to cash out their policies to provide a source of funds to deal with medical expenses also can sell their insurance policies. Cash flow consultants are equally qualified to connect such sellers with qualified buyers. These settlements may be strictly governed by state and federal laws. One caveat to remember: There may be income tax liability imposed on policyholders entering into life or viatical settlements . Anyone thinking of doing so should check with their tax professional first.

About American Cash Flow
The cash flow industry is the fastest growing division aspect of the financial services arena today. The American Cash Flow Institute, founded in 1988, provides an effective training program that prepares people to become consultants in the cash flow industry. The training offers comprehensive programs through which enrollees get practical, industry-wide information, taught by practicing industry professionals. ACFI remains committed to its graduates success by providing ongoing support through membership in the American Cash Flow Association.

Publish Date : 11/25/2004 7:52:00 PM Source : Onlypunjab.com Money and Finance Team

The price should be driven by the purpose of the appraisal, the appraisers professional standards, and the appraiser's overhead.

Like any other professional service, such as legal services, medical care, financial advisory services, or accounting services, the price of appraisal services to the ultimate user should always be one consideration in selecting the professional or professional firm. However, it's usually not appropriate to shop for the lowest priced vendor, or to use competitive bidding to obtain the lowest price. The heart patient whose life may depend on the skill and judgment of his surgeon, wouldn't be smart to put his surgery out to bid. Similarly, the client whose financial fortunes may rely on the quality of work or the effectiveness of testimony by his valuation expert should probably not make a decision on hiring an appraiser based primarily on lowest fees.

Beware of Low-Cost, Low-Wisdom Appraisals - Your Financial Life May Depend on It!
In business appraisal, the low-end software-driven product should be approached with caution. In general these products are designed to give quick, and not necessarily accurate answers to price shoppers, and by design deny the client the expertise of the appraiser's many years of valuation wisdom. Often these are done by part-time appraisers, or are loss-leaders intended to lure clients into more expensive consulting agreements. Users should beware of any appraiser who is willing to render an opinion of value without a site visit, personal interview, and hands-on inspection of the company's financial and administrative records.

That said, the relationship between quality of services and fees is not linear: there are factors unrelated to the quality of the services that affect the fees demanded for them. For example, the basic amount of work the appraiser has to perform for an appraisal is driven by the professional standards he must follow in conducting the appraisal. The emergence of the Uniform Standards of Professional Appraisal Practice (USPAP) as the controlling rules for appraisal engagements has increased the amount of work appraisers must do, even for simple appraisal assignments.

The largest single driver of appraisal cost though, is the purpose to which the client desires to put the appraisal result. Appraisals for use as informal pricing guides for sellers or buyers require the least amount of work on the continuum of effort, and appraisals done for use in contentious litigation probably require the most effort. In between these extremes are appraisals for other purposes, such as buy/sell agreements, partnership agreements, estate planning, asset allocation, etc.

Preliminary Analyses, Value Studies - $3,000 to $10,000.
These kinds of less-than-comprehensive valuation efforts can be well-suited for situations where a client needs a ball-park estimate of value, perhaps as a starting point for sales negotiations, or to achieve a better understanding of the value drivers in his company. Often this type of assignment is begun with a Value Study to identify the value drivers of the subject business entity, and followed-on with consulting over a period of time to prepare the business and the owner for subsequent sale. Where we are involved in negotiation, packaging, or presentation of the business entity there may also be a success fee payable to our firm.

Limited Partnership Appraisals - Value in Real Property Assets Only - Discount Study - $3,000 to $10,000.
The typical setting for this kind of appraisal is a Family Partnership formed to protect real property assets from estate taxation. Usually the partnership has no income distributions to the limited partners, and all of the profit is paid to the General Partner. The value of the entity is based on its assets, and the values of the real property assets are provided to us by the real estate appraiser. Our assignment is to estimate the value of small minority limited partnership holdings in the entity, and to assign marketability and minority discounts from the enterprise value, if applicable. These projects typically involve only a summary report.

Comprehensive Appraisal - Summary Report - $7,500- $35,000.
This is the most common type of assignment, and calls for the application of a full complement of appraisal procedures. This is the type of engagement suitable for most kinds of litigation, including family law, partnership disputes, shareholder oppression litigation, forced buy-outs, business torts, contract disputes, etc. The chief reason that appraisal engagements for litigation cost more is because the analysis and reporting must be performed to a standard of thoroughness that will allow them to survive rigorous cross-examination by opposing counsel. This takes time and costs money, just as all of the other components of litigation. The appraisal is not the place to cut corners.

All of these pricing guidelines are predicated on the availability of good bookkeeping and accounting records. Generally, the appraiser cannot commence the engagement until there are good financial statements (income statements and balance sheets) available. These need not be uncontested, of course, but where the income of the entity or the values of the assets are in question, the appraiser must be given an instruction as to what assumptions to use in his appraisal.

Steven Schroeder, JD MCBA ASA , heads the Northern California offices of American Business Appraisers. You can reach him at 800-882-2600, or via e-mail at sfs@busval.com. http://www.inc.com/articles/2003/07/25684.html

People who successfully bring suit in a personal injury, wrongful death, medical malpractice, or other type of lawsuit, or who settle a worker's compensation claim, often must make a difficult financial decision. Should they take the money as a lump sum or spread it out in a series of payments over a certain period of time, called a structured settlement? There are advantages and disadvantages to each approach, so one should weigh each option carefully before choosing, the Institute of Certified Financial Planners, Denver, Colo., cautions.

The majority of people who settle a civil lawsuit or worker's compensation claim take a single cash payment, which may be the best choice in some cases. The victims may have accumulated significant medical debts, for example, that need to be paid off as soon as possible. They potentially can invest the money and earn more with it than if they had taken it in a series of structured payments. Moreover, if the recipient dies, heirs have access to the remaining lump sum, while structured settlement payments often stop at death.

There are risks to the lump-sum approach, though. Research has shown that most people spend a lump sum in a relatively short time. One study found that 25-30% of all accident victims spend their settlement within two months, and 90% do so within five years. Quickly running through a lump sum can be devastating, particularly if one will need the money for years or even a lifetime to pay for medical or living expenses. There also is the risk that the lump sum will be invested unwisely. Relatives or unscrupulous investment sales people may try to prey on a victim's "wealth." Whatever the reason, once the money is gone, it's gone for good.

Structured settlements provide an agreed-upon series of payments over a specified period of time, which may be as long as the recipient's lifetime. Payments typically are made through an annuity from an insurance company (be sure the firm is financially sound) or by a trust that invests in U.S. Treasury bonds. The total payments are designed to equal a lump-sum payment earning a particular rate of return over that specified period of time.

A structured settlement may be designed to pay out smaller lump-sum amounts in addition to regular monthly payments. It might provide an up-front amount to take care of accumulated medical expenses, then dispense lump sums at certain points later, such as when a child enters college or the recipient reaches retirement age.

Structured settlements reduce the risk that the recipient will squander the settlement. Periodic payments can be designed more easily to meet the recipient's ongoing living or medical expenses. In addition, they provide a tax advantage over lump-sum payments. Although structured settlements and lump-sum payments generally are tax-free (there are some exceptions), the earnings from an invested lump sum are not (unless they are received from a tax-free investment such as municipal bonds).

However, there are disadvantages to structured settlements. Some may not be guaranteed for their full settlement period. Some structured settlements end at the person's death. Finally, unlike a lump-sum payment, smaller periodic payments may not meet large unexpected expenses.

From USA Today

Pair convicted of credit fraud

Operators of two Cincinnati building cleaning services were convicted Friday in federal court in Cleveland in connection with a conspiracy to sell fraudulent accounts receivable to "factoring" companies.

Factoring companies buy accounts receivable at a discount, assuming the credit risk of the account debtors, and receive cash as the debtors settle their accounts.

According to the U.S. Department of Justice, Troy Parker, 38, and Kristine Parker, 37, were found guilty of conspiracy, mail fraud and wire fraud after a trial in U.S. District Court.

They incorporated Imperial Cleaning Services Inc. and Imperial Building Cleaning Services Inc. in Cincinnati and operated them as building cleaning businesses. In 1998, they led factoring companies to falsely believe they or their business had valuable accounts due from customers for whom they provided cleaning services. They caused a loss of more than $500,000 to one factoring company, Commercial Factors of Cleveland Inc.

The Parkers are scheduled to be sentenced in January.

The Cincinnati Post