A Life Settlement, or the sale of a life insurance policy, is gaining popularity as a new opportunity for seniors to generate cash. By “cashing in” a life insurance policy, one can reap the rewards of an immediate cash payout without lapsing or surrendering the policy to the insurance company.
Faced with rising insurance premiums, increasing cost of healthcare and long-term care, more seniors today are choosing to sell their life insurance policies to third parties for a lump sum payment. Rather than let their policy lapse, seniors have the option of cashing out early and enjoying a higher quality of life.
Seniors can use the cash they receive from the sale to help pay for medical expenses, long-term care expenses, or everyday living expenses. Additionally, seniors are using the “unlocked” cash to travel, invest in a business or new property, or support their children and grandchildren. There are no restrictions or limits to how the cash may be used once the policy is sold.
How does it work? Seniors who are over 70 and own a life insurance policy worth over $200,000 can sell their policy to a life insurance buyer, otherwise known as life insurance broker or life settlement brokers.
By purchasing the whole, term, or universal life insurance policy, the buyer becomes the new policy owner. This means that the buyer takes over the premium payments and ultimately collects the full amount of the death benefit.