Life Settlements

Life Settlements

What is a life settlement?

​A life settlement is a financial transaction in which the owner of an existing life insurance policy sells the policy to a third party for a lump sum of cash. The third party then assumes ownership of the policy and becomes the beneficiary. The life new owner will collect the death benefit when the insured person dies.

Life Settlements

Thousands of senior citizens are looking to sell their life insurance policies for cash. Many use the cash they receive to help pay for end of life and long-term care costs. When they sell their life insurance policy to an investor or third party for cash this transaction is called a life settlement.

Example: Jane is 85 years old. She owns a $1,000,000 life insurance policy. She has developed chronic health problems, and now needs nursing care. Jane decides to sell her life insurance policy, instead of continuing to pay for it. She will then use the cash to pay for her long-term care costs.

In a study of 9,000 policies that were the subject of a life settlement between 2001 and 2011, policy owners received more than four times the cash surrender amount through a life settlement.

Insurance policy holders find numerous benefits by selling their polices – using the cash to improve lifestyle, supplement retirement income, cover health care and medical expenses or simply to reduce overall expenses.

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