Life seldom works out as planned. A life settlement provider may be able to help you convert your life insurance policy to cash. Life settlement providers are companies, or sometimes individuals, who operate in the secondary market for life insurance. You should not confuse them with life insurance companies. They are in the business of aggregating and buying policies and do not have any fiduciary relationship with their clients.
The Right Questions
Life insurance settlements are a way to monetize a life insurance policy that is no longer wanted or needed. There are tax implications that must be considered. The ability to enter in a life settlement agreement has been legal for over 100 years. It was almost a well-guarded secret, as insurance companies would rather pay the insured the cash surrender value of his or her life insurance policy rather than the full face value to an owner not related to the insured. This is a financial decision by the companies. By being silent about life settlements, they encouraged people to either abandon their policies or cash it in for face value only. This is good for an life insurance company’s bottom line.
Life settlements bring together a willing seller and a willing buyer. As the policy owner, or seller of the life insurance policy, you know exactly what you are getting. When you negotiate and agree to a settlement with the life settlement provider, you receive an agreed amount in the form of a single lump sum. As the buyer of the policy, a life settlement company is making an educated guess on the rate of return they will realize when the insured dies and they can collect the death benefit.
Life insurance can be a much needed source of money when you are in your twilight years. Viatical settlements and life insurance loans are two available life settlement options. Learn the similarities and differences when comparing viatical settlements and life insurance loans.