How does a life settlement work? A Life Settlement could be your solution to rising or burdensome premiums on life insurance you no longer need. Unfortunately, uninformed seniors surrender life insurance policies every day, without ever realizing that they could have received more than double their surrender value by simply utilizing a life settlement.
All but about 5 states now have a Life Settlement regulation and life settlement licensing requirements. Several states led by Washington, now mandate that insurance agents inform their clients of the life settlement option. The fact that there are states that now require their residents be advised of this option by their Insurance Company, speaks volumes around how mainstream Life Settlements have truly become.
This creates a major conundrum for some insurance agents whose insurance companies ‘strongly discourage’ their disclosing a life settlement option to surrendering policy holders. And with more and more people asking “How Does a Life Settlement work?” Your insurance agent should never have to choose between their fiduciary responsibility to you and a conflicting company policy, but that is exactly the situation that some captive agents feel that they now face. Many new options are gaining traction, depending on your specific situation and needs. A loan on your life insurance is the newest option available, followed by a medicaid life settlement and viatical settlements. You should know the value of your life insurance policy, so we have made it easy to get a life settlement estimate with our life settlement calculator. Our life settlement calculator will provide you a very general range of the value in your life insurance policy as a life settlement, without having to give up personal contact information.
There are various estimates, but it is pretty safe to state that more than 80% of life insurance policies never pay a death benefit. Somewhere along the way people either lapse their insurance policy, borrow all of the money out or simply surrender their policy for any cash value that is available.
Cash value life insurance such as Universal Life was often sold with long term projections and illustrations of 8% and up. When interest rates went down, interest sensitive insurance policies could not perform to those expectations. Considering that the amount of insurance you pay for each month within these plans is often related to how well the cash portion is performing; it can have a very severe impact on the ability of the policy to make it to maturity, without escalating your premiums.
If you are paying for term insurance or just the cost of insurance inside of a permanent plan, you have certainly noticed by now how dramatically the cost of insurance can increase in the later years of your life. Some people have been forced to lapse their insurance due to rising premiums. You need to understand that there is now a life settlement option, if you qualify, to get more than the promise of zero.
“Fun is like life insurance; the older you get, the more it costs.”
Before you surrender or lapse your life insurance policy, take the time to have your life insurance policy appraised, then research and explore all of your options. If you are over 65 years of age, a life settlement could be the solution for which you have been looking, but you still need to do your homework.
Life Settlements allow you to harvest some of the intrinsic value that you have accumulated in your insurance policy… by living. With a life settlement, even your unneeded term insurance policy and your insurance policies with no cash surrender value may now actually hold value… to you.
You should start with a life settlement appraisal, much of the hidden value may not be liquid as in your home. No two life settlements are the same and it is always good to have a starting price point.