Considering Life Settlements

The economy over the recent years have lead many people to ponder on the true value of their assets as well as the financial needs they would encounter in the not-so-distant future. Senior citizens, compared to the middle aged citizens are considerably better off since they have secured for themselves retirement funds, some real estate property, college educations for their children and for most, life insurance.

But what happens if life insurance is no longer needed. Life insurance settlement is now a popular byword in today’s insurance business. With the shaky economy, more and more people are considering the here-and-now versus having to think of what their families might get in the even of their death. Even cash savings have become considerably more valuable than life insurance.

Life settlement is defined as a “cash payment to the owner of a life insurance policy in exchange for the assignment of the ownership of the policy”. The turning over of the life insurance policy to another in return for cash may be the antithesis of what an insurance policy is, however, with hard times coming , it becomes a necessity. More and more people are considering selling off their life insurance for that much-needed cash.

Also called senior settlements, life settlements are sold at more than the cash surrender value either by the person itself to a third person or through an intermediary of a third person. The purchaser then becomes the owner of the new policy by just simply having the policy registered in the purchaser’s name. The purchaser becomes responsible for any unpaid premiums and other fees needed for the insurance to mature.

A senior settlement is turning an unwanted or unneeded insurance policy into liquidated cash with 20% of the life settlements exceeding their cash surrender value. Some people who sell their insurance policies usually sell their policies for other reasons. People who are left without issue (or without any living heirs who can benefit from the life insurance) sell their insurance policy. Others have already more than one insurance policy that they don’t require another insurance policy.

The health and age of the insured are important in considering the value of the life settlement. If the policy is a survivorship policy, the same factors are considered but not only for the insured but the insurer as well. Seniors between the ages of 65 to their 70s can still sell their senior settlement provided they are of good health. If you are considering a life settlement, you can always talk to a life settlement provider or broker for options.

By: Caitlina Fuller

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Caitlina Fuller is a freelance writer. The health and age of the insured are important in considering the value of the life settlement. If the policy is a survivorship policy, the same factors are considered but not only for the insured but the insurer as well. Also called senior settlements, life settlements are sold at more than the cash surrender value.