What Is A Life Settlement?
Senior citizens are discovering the true value of their life insurance by utilizing a financial planning tool known as a Life Settlement. A Life Settlement is the sale of a life insurance policy for an amount greater than the cash surrender value of that policy. Most often, the buyer is a financial institution who provides a lump sum cash settlement in exchange for ownership (and future benefits) of the policy. The settlement price represents the present day value of the policy. It is determined by the insured's life expectancy and the anticipated cost of keeping the policy in force during the insured's lifetime.
The proceeds can be used in any way. They can even help purchase new lower costing coverage, thus reducing or even eliminating the policy owners out of pocket cost for life insurance.
When Should I Consider A Life Settlement?
- When the insured is over the age of 65
- When a policy is about to be dropped or cashed in
- When any type of new insurance or investment is under consideration
- When new lower costing policies are introduced
- When the insured has outlived the beneficiaries
- When there is an estate tax change
- When premiums are no longer affordable
- When the insured has had a change in health
- When a key man or business partner is retiring or a company is being sold
- When there is a liquidation of assets due to bankruptcy
