A life settlement is an agreement between an individual who owns a life insurance policy and a third party who agrees to provide the owner with cash in return for the policy.
The potential benefits of life settlements are great for individuals who can no longer afford to pay the premiums on a life insurance policy and for third-party investors who are looking to profit from the purchase of a life insurance policy. The drawbacks of a life settlement are that the policy owner might not be able to qualify for a new life insurance policy and the policy owner may be giving up an opportunity to build a death benefit.
The buyer of the life insurance policy transfers all the rights and responsibilities of the life insurance policy to the third party buyer. This buyer is typically a third party trust, a family member, or a group of investors. For example, imagine you own a life insurance policy with a death benefit of $300,000, and the life settlement buyer is a third party trust that has assumed responsibility for the insurance policy. The third party trust may even pay all the future premium payments on the policy to you. This life settlement reduces your monthly life insurance premiums, enabling you to pay off debt, save for retirement, or invest in your retirement or other goals. Life settlement investors receive a return, which can vary greatly.
Who benefits from a life settlement?
It could be any entity or person that uses the premium as additional income. For example, it could be an individual or an institution. Any person who currently receives a pension as per the current scheme will be able to benefit from the proceeds of the policy.
What type of policy is bought in a life settlement?
Any type of life insurance policy will be bought in a life settlement. They are segregated into two categories: whole life and term life. Wholesale policies are bought in a wholesale life settlement. Term life policies are bought in a term life settlement.
Why sell a life settlement?
When you die, your family often has to fight in court to get all the assets from your estate. Then they have to go through probate court to get the assets. But if you sell your life insurance policy to a third party, you don’t have to worry about these potential pitfalls. You can take the cash and get the cash payout while your heirs can concentrate on taking care of the survivors. If you’re selling your life insurance policy for less than you paid for it, this might not be your best choice. The problem is that if you sell your policy for more than you paid for it, you’ll get less in the settlement than you sold it for.
Life settlements are considered one of the best long-term investment option for a couple to invest on a long-term basis. Investors are always willing to shell out high returns for a guaranteed asset on a recurring basis. Find a reliable Life Settlement Broker today who offers you life settlement investments within your pocket.