While planning for retirement, you may be wondering how you will afford the retirement lifestyle of your dreams. Your life insurance policy, which you may no longer require, can provide you with additional cash to help you solve this problem. A Life Settlement is the sale of your life insurance policy to a licensed provider.
It is worth noting that the United States Supreme Court declared life insurance to be personal property in 1911. In other words, just like selling a house or a car, selling a life insurance policy is a legal right. Life settlements come into play here.
You should think about a life settlement if you:
- Can no longer afford premium payments.
- Are Looking to find a way to pay long-term care costs.
- Want to retire at a vacation spot.
- Your life insurance policy is no longer needed.
All of these considerations lead to the conclusion that your life insurance policy would benefit you far more as a cash payment now.
According to Forbes, a life settlement can help cover medical expenses, long-term care, or any other financial obligations that the policy owner may have. Unfortunately, most policies lapse or are surrendered without the owner benefiting because few people are aware that this option exists.
If seniors were aware of the existence of a life settlement option, 90 percent would have considered it. It is critical that seniors are informed that their personal property has real value.
According to research from the London Business School, a life settlement pays policy owners an average of more than four times the cash surrender value of the policy. The money received from a life settlement transaction can be spent however you see fit, whether it’s on a dream vacation or to pay off existing debt.
What Are My Life Settlement Choices?
There are also various options available with a life settlement, depending on your financial situation and what would benefit you and your family the most. The three options are as follows:
The Retained Benefit option eliminates the need to pay premiums while retaining a portion of the benefit. When the policy expires, beneficiaries will receive a guaranteed percentage, but there will be no further obligations or payments to make.
The Traditional option entails selling the entire life insurance policy for a cash amount greater than the policy’s surrender value.
The Hybrid option combines the other two options (Retained Benefit and Traditional) by selling a portion of the life insurance policy. With this option, you will receive a cash payment right away. When the policy expires, the beneficiary will receive a guaranteed percentage of the benefit, and there will be no further obligation to pay future premiums.
Is it legal and safe to make a life settlement?
Because this is a lesser-known option, you may be wondering if selling your life insurance policy is both legal and safe. It is critical that you begin your life settlement process with a reputable and certified company. Life settlements are now a legal and regulated industry. Life settlement laws are enforced at the state level.
Do You Want to Begin?
To begin, contact a life settlement company and request a quote for your policy. It is in your best interest to work with a direct provider because they will be the ones handling your case without any middlemen.
If you work with a broker, they will frequently deduct a commission from the final settlement account. Customer reviews, Better Business Bureau ratings, and other research can help you choose the best company for you. A list of highly qualified life settlement companies can be found here.
As long as you work with an experienced company, the process of selling your policy will be simple and quick. Throughout the process, they should provide and educate you so that you fully understand how your offer is calculated. Depending on the company, you may be able to receive a cash payment for your policy in as little as 30 days.
While awareness of life settlements as a financial option has grown over the decade, many seniors are still unaware of it. Life settlements are a safe bet for retirees in need of funds and who want to use their policy as a living benefit today.