What is Life Settlement?
A “Life Settlement” is a transaction where the owner of an existing life insurance policy sells his/her policy to an investor. The policy owner receives a one time cash payment while the new owner (the investor) begins making all premium payments thereafter and receives the future death benefit.
Why sell a life policy?
There could be a number of reasons:
- The policy owner may receive more cash from an investor than their insurance company.
- You may have a term insurance policy that initially was low in cost, but now has increased dramatically. The cost is prohibitive and converting to a permanent policy is not affordable either.
- You have a permanent life policy with some cash value and thinking about cashing it in.
- Perhaps you have a liquidity problem and looking for cash.
When you initially purchased your life insurance policy, its purpose may have been for family protection, estate tax planning or a whole host of reasons. Now, if you no longer wish to keep your policy in force, traditionally you had two options, surrender it for the cash value or let it lapse. With Life Settlement, you have another option that may provide a greater financial benefit than other options. When a life policy is sold, you receive a specified cash payment. The amount you receive is a function of several factors including the policyholders age, medical history, face amount and policy cost.
Call us today to review all your options, and we’ll help you choose the one that’s best for you and your family.
Who else should consider Life Settlement?
- Businesses: May have key-man life insurance no longer needed that may be eligible
- Attorneys: May be a viable option for estate planning purposes
- CPA’s: May have clients with liquidity issues
- Trustees: As part of their ongoing fiduciary duty, Life Settlement may be a viable option
- Non-Profits: Donations of life insurance sold as a Life Settlement may be a good fund raising method