Top Three Life Insurance Valuation FAQs

VERITI CONSULTING LLC

Top Three Life Insurance Valuation FAQ’s

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QUESTION #1

While insurance agents provide annual statements and specific policy internal values, in most instances they will not be considered “qualified appraisers,” as defined by the IRS. A qualified appraiser, in general, is someone who is experienced and credentialed in the valuation field, and spends a significant amount of time preparing valuations as their occupation. It also requires the individual holds her/himself out to the public as a life insurance valuation expert.

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Why can’t my insurance agent value my life insurance policy?

QUESTION #2

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Why do I need my life insurance policy value?

Depending on the circumstances, many gifts or transactions involving life insurance policies, including policies held in qualified plans, need to be reported to the IRS. The fair

market or cash value of the life insurance policy must be established at the time the transaction occurs. If an audit of the tax return occurs, the valuation report will substantiate

the value reported.

QUESTION #3

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How is a life insurance policy valued for “fair market value” purposes?

Similar to other valuations for business interests or other assets, an appraisal prepared by Veriti Consulting will consider

all three standard valuation approaches. These approaches will include an asset, income and market methodology.

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