Seniors Turn Life Insurance Policies Into Cash With Life Settlements

With uncertainty in the economy, seniors are looking to non traditional sources of money for their retirement years

. A growing number of seniors are turning to the novel life settlement market for cash. While many don't know life settlements are available, they offer large and readily accessible sums of money from unwanted or unneeded life insurance policies.

Life insurance policies are usually purchased to provide much needed financial security in the event of someone's death. When a life insurance policy is no longer needed many people mistakenly assume the policy has little or no value. In years past policy owners had two options for their unwanted life insurance. First, they could stop paying premiums, which then allowed the policy to lapse. In this scenario, the policy owner gets nothing. Secondly, some life insurance allows for the policy to be returned to the insurance carrier for the "cash surrender value". Unfortunately, the cash surrender value is often only a nominal amount of the policy's death benefit.

Life settlements offer a third and more attractive option. A life settlement occurs when someone sells their existing life insurance policy for an immediate lump sum payment. The seller benefits by getting instant money which is often 200%-500% more than the cash surrender value offered by the insurance carrier. While the buyer, often a financial institution such as a bank or investment fund, pays the ongoing premiums and receives the death benefit when the policy matures.

Life insurance is an asset, just like stocks, bonds and real estate. As such, life insurance owners have the right to sell it. The right to sell one's life insurance has been upheld by the Supreme Court since the 1800's.

The life insurance settlement process is relatively straightforward and easy. Contacting a life settlement broker for a free analysis and consultation is the first step. These licensed professionals can provide an estimated value for a life insurance policy on the secondary market. After completing an application and collecting some documentation, the policy will be offered to a number of prospective buyers for consideration. From there, the policy seller simply chooses the most attractive offer and collects the life settlement proceeds.

by: Kelly Ramirez

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