While planning for retirement, you may be running into the issue of wondering how to afford the retirement lifestyle of your dreams. An asset you may no longer need can provide you additional cash to solve that, your life insurance. Selling your life insurance policy to a licensed provider is known as a Life Settlement.
It is important to note that in 1911, life insurance was deemed personal property by the United States Supreme Court. In other words, just like a house or car, it is a legal right to sell a life insurance policy. That is where life settlements come in.
You may want to consider 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 reasons conclude that your life insurance policy would much rather benefit you as a cash payment now.
According to Forbes, a life settlement can help cover medical expenses, long-term care, or any financial expenses faced by the policy owner. But unfortunately, most policies lapse or are surrendered without the owner benefiting since not many realize that this option even exists.
90% of seniors would have considered a life settlement option if they knew it existed. It is essential for seniors to be informed that there is real value in their personal property.
Research from the London Business School shows that a life settlement pays policy owners an average of over four times the policy’s cash surrender value. The money received from a life settlement transaction can be used any way you want, whether it’s going on your dream vacation or paying off existing debt.
What Are My Life Settlement Options?
With a life settlement, there are also various options to choose from depending on your financial situation and what would benefit you and your family the best. The three options are:
The Retained Benefit option means no longer needing to pay any premiums, and a portion of the benefit is retained. Beneficiaries will receive a guaranteed percentage when the policy ends, but there will be no further obligations or payments to make.
The Traditional option means that the entire life insurance policy is sold for a cash amount above the policy’s surrender value.
The Hybrid option is a combination of the other two options (Retained Benefit and Traditional), where a portion of the life insurance policy is sold. With this option, a cash payment is received now. The beneficiary will receive a guaranteed percentage of the benefit when the policy ends, and there is no further obligation to pay future premiums.
Are Life Settlements Legal and Safe?
Since this is not a well-known option, you are probably questioning if selling your life insurance policy is legal and safe as well. It is vital that when you start your life settlement process, you are working with a reputable and certified company. Life Settlements are legal and have become a regulated industry. Laws regarding life settlements are enforced at the state level.
Want to Get Started?
To get started, contact a life settlement company to receive a quote for your policy. To ensure you get the best offer, it is in your best interest to work with a direct provider since they will be the ones handling your case without any middlemen.
If you work with a broker, they will often take a commission towards that final settlement account. Checking customer reviews, Better Business Bureau ratings, as well as other research, can assist you in choosing the best company for you. You can find a list of highly qualified life settlement companies here.
The process of selling your policy will not be complicated and time-consuming as long as you work with an experienced company. They should provide and educate you throughout the process, so you fully understand how your offer is calculated. You may also be able to receive a cash payment for your policy in as little as 30 days, depending on the company chosen.
While the awareness of life settlements as a financial option has grown through the decade, many seniors still do not know about it. Life settlements represent a safe option for retirees who need money and want to use their policy as a living benefit today.
Do you have a life insurance policy? Are you going to keep it? Did you know you have the right to sell it as a life settlement? Have you spoken with a life insurance professional who can guide you into the best options for you?