A life settlement makes sense for several reasons. A life settlement transaction involves selling an unwanted life insurance policy to a third party on the secondary insurance market.
After the policy is transferred to the buyer, the seller does not pay the premium any more. All of the policy’s benefits of the policy now belong to the new owner of the policy as well. The seller, in turn, receives a lump sum of money for the sale of the policy.
Over the last decade, the life settlement industry has experienced an explosion. This is due to information; policyholders are now aware of the life settlement option. There are several times when a life settlement may make sense:
Policy is no longer needed
Some choose to sell their policy because they no longer need it and having the money now would be more beneficial to them and their family.
Proceeds to meet family’s needs
Once the policy is sold on the secondary market, the seller receives a lump sum of money. This money may be used for any purpose that the seller wishes.
The Life Insurance Settlement Association, or LISA, explains the most common reasons seniors choose to sell their life insurance policies.
These reasons include:
- The policy is about to lapse or nearing expiration.
- The policy’s premium is too expensive.
- Long-term medical costs
- Life changes, including death of the beneficiary, a divorce, paying off a mortgage.
- Donating to a charity.
- Policyholders wish to sell the policy in order to obtain a better one
- The policyholder simply needs money to cover living expenses.
Valuable financial tool
A life settlement may offer a valuable financial tool for seniors who are in need of money now. Rather than allowing a life insurance policy to lapse and receiving no money despite the premiums you have paid for years, or surrendering the policy back to the insurance company, usually pennies on the dollar. Life settlements offer policyholders options so they can determine the most beneficial for them. .
A life settlement may be a wise financial choice for seniors whose policy is about to lapse, or if the premium is becoming too expensive, or if they simply do not need the policy anymore. Consider all of your financial options before determining the best for you.
If you or someone you care for is interested in learning more about the options that life settlements offer, contact us today. The initial consultation is complimentary and highly informative.