Life Settlements for Seniors Unwanted Policies
Does unwanted life insurance have a value to seniors? Well, sometimes it does, and this has become a new way for older people to raise cash.
In general, investors actually buy the policy, become the benefiary, and offer to pay future premiums. They hope to make a profit when the insured person does pass away. In return, the seller gets cash they can use now.
Many people think that this is a good option. They do not have to pay future premiums, and they get paid cash that can be used for current needs. In these cases, the old beneficiaries agree they do not need the money later, and also agree they have a need for the money now.
In the past, a person only had a couple of choices when they did not want to keep a policy. They could simply stop making premium payments and let the contract lapse as unpaid. Or they could surrender it to the original insurer, and settle for the cash value. This cash value was usuallly a small percentage of the contract’s death benefit though.
These days, life settlements present a much better choice.
So who, exactly, can take advantage of this choice?
Though I have seen younger people being considered, most of the time the insured person must be at least 70.
Do All Types of Life Insurance Work?
In addition, the policy must be permanent. Whole or universal life insurance would qualify. A term policy may be accepted if it has guranteed option to convert it to a permanent policy.
If you have term with a convertible option, make sure you start shopping for a deal when you have time left on your policy.
Is this a good idea?
This is not the best choice for all people, or for all families. But many people have been happy to take advantage of this way to raise cash.
You need to understand that the beneficiaries will give up any future death benefit. This really only works if those benefiaries are in agreement.
Business can also use this as a way to sell policies on employees who have retired or changed jobs. Instead of just letting the contract lapse, they can actually be paid cash. This can be a good use of a key man or business owners policy.
So what is the bottom line?
The actual amount will depend upon the death benefit, age of insured, and other factors. But I have seen offers of 1/3, 1/2, or even more of the death benefit. Since the market is now competitive, qualified policies may be able to generate multiple offers.
How To Find Out More About Life Settlements?
If you think you, or a senior citizen that you know, will qualify, you can look for a local life settlement broker. This broker should be able to help you shop the market to get competitive offers for your policy.
In the end, the decision will belong to the policy owner. The owner is not always the insured person, but many times it is.
