Life Settlements - 0.2 CPE

Turning a Life Insurance Policy Into Cash Can Trigger Unexpected Tax Consequences.

Life settlements allow policyholders to sell unwanted or unaffordable life insurance policies to third-party investors in exchange for an immediate cash payment. While the transaction may provide valuable liquidity, it also changes the tax treatment of the policy and creates important reporting obligations.

Understanding how life settlements differ from policy surrenders is essential for accurate tax planning and compliance.

Learning Objective

Recognize how life settlement transactions are taxed differently from policy surrenders under federal tax law.

Course Description

This nano-learning course examines the tax treatment, reporting requirements, and financial planning considerations associated with life settlement transactions and viatical settlements.

Who Should Take This Course

Tax and accounting professionals advising retirees, estate planning clients, business owners, or individuals considering the sale or surrender of life insurance policies.

Why This Course Is Important

Life settlements can generate substantially more cash than policy surrenders, but they often trigger more complex tax consequences. Understanding the distinction between ordinary income, capital gain treatment, viatical settlement exclusions, and IRS reporting requirements helps practitioners avoid costly compliance mistakes and unexpected tax liabilities.

Author / Instructor

Lee T. Reams, Sr., BSME EA
Lee T. Reams, Sr. is an Enrolled Agent with extensive experience in tax preparation, representation, and advanced tax planning. He is known for helping practitioners apply complex tax rules in real-world client situations.

Course Details

This course qualifies for NASBA continuing professional education credit. CountingWorks, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: www.nasbaregistry.org.

Understand the Tax Impact of Life Settlement Transactions

Start Life Settlements and learn how policy sales, viatical settlements, and surrender transactions are treated under federal tax law.