If you are thinking about a life settlement, there are a few things to keep in mind before you go through with the sale.
A life settlement occurs when a person who is insured by a life insurance policy decides that they would like to sell that policy to a third-party life settlement provider in order to receive the life insurance payment while they are still living.
A policyholder can decide to do this for many reasons, but once they decide to go down the life settlement path, they should consider these three things to get started.
1. A Life Settlement Can Be a Great Benefit to You if You Are Over 65
The most common demographic of policyholders that choose to conduct a life settlement is 65 years of age or older.
This is because in many cases, older adults who have reached retirement age have realized that their life insurance policies have become more of a burden than a benefit.
In some instances, a life settlement could grant these policyholders more cash benefits than if they left their life insurance policies to be cashed out after their passing.
Oftentimes, life insurance policies come with high premiums that may start to feel unrealistic on a retirement budget.
Many people who choose to conduct a life settlement have term life insurance policies that may have been purchased in order to ensure that their descendants were taken care of in the case of an untimely death.
As policyholders become retirees and their children have their own lives, they may decide that their policy is no longer needed.
If you fall into this category, it may be time for you to sell your life insurance policy.
2. Life Settlement May be a Better Option than Surrendering Your Policy Back to Your Insurance Company
Many people in the United States do not realize that they have the option of a life settlement and resort to lapsing or surrendering their life insurance policy back to the insurance company from which they purchased it.
This could result in the loss of thousands of dollars and leave them in a worse situation than they were in before.
If you are paying high premiums with your current life insurance policy, you don’t have to settle by surrendering your policy.
A life settlement will ensure that you will get an immediate cash payment and you will no longer need to pay any more premiums.
3. You Must Work With a Licensed Life Settlement Broker
These sales can get very complicated, especially if you have had the policy for many decades, and you will want to have a knowledgeable professional at your side when you start the sale process.
Regulations in certain states require that all policies are sold through a licensed life settlement provider.
If your state requires this, it would be helpful to reach out to a life settlement broker in your area and begin the next steps of your life settlement process.
Summing up: 3 Key Things You Need to Know About Life Settlements
In conclusion, if you are considering a life settlement, remember that may be the best decision for a fulfilling retirement.
Review and compare the benefits of a life settlement versus surrendering your policy, as it’s most likely that a life settlement is a more profitable option.
If the life settlement path is the one you choose to take, make sure to form a relationship with a broker early on in the process so that you have help all along the way.