A Life Settlement is the sale of an existing life insurance policy to a third party for more than its cash surrender value but less than its net death benefit
Many American seniors—typically those 70 years of age or older—are discovering that life insurance policies that once seemed appropriate, no longer meet their needs. Unfortunately, the life insurance companies that sold them the policies in question may not offer real advice or solutions.
The insurance companies do allow their customers to “surrender” their policies, which means the policyholder will be offered a mere fraction (typically 3-5%) of the policy’s face value. However, they often discourage their personnel from telling customers that they can realize far better cash outcomes, thus obtaining far greater payoffs on their existing policies, through life settlements.
Life settlements represent an important option for a growing number of people who may have thought that they had no options at all. Rather than continuing to pay premiums on a policy that no longer serves its original purpose, life settlements offer consumers payoffs that can be significantly greater than surrendering a policy. Life settlements offer a reasonable and profitable exit strategy that addresses the financial objectives of policyholders.