his may be their spouse, who will use the funds as a means of support for the remainder of their own life, or, in the case of younger individuals the beneficiaries are often dependent children who will need funding for their education and support before reaching adulthood.
These kinds of policies are an especially good hedge against the accidental death of a family’s primary provider. It is not uncommon for a husband to have a policy with his wife as a beneficiary and for the wife, in turn, to have coverage naming the husband to receive her policy’s value. However, as people age, they often find fewer reasons to maintain such coverage, which can, over the life of the policy, become a financial burden. Given that fact, there are actually times when it makes more sense to sell your life insurance policy and to benefit immediately from the cash reward. For instance:
• Your intended beneficiary precedes you in death and there is no one else you want to name or feel you have a responsibility to name.
• The premiums become more than you can afford after retirement when most people find themselves living on a fixed income.
• You need access to the funds to maintain the standard of living to which you are accustomed or to improve your current standard of living.
• The money generated from the sale of the policy is required to cover pressing bills.
• You find yourself in a situation of needing long-term care and need an infusion of cash.
• You believe the value of the policy could be used to generate income via another type of investment.
• You simply change your mind about wanting or needing the coverage.
Under any of these circumstances, or for others that may apply, senior life settlements can be the best possible course of action. By selling your life insurance policy on a secondary market, you can receive a lump sum of cash and benefit immediately by re-using the funds as you see fit.
In the past the only options available for life insurance settlements were:
• selling the policy back to the issuing institution for a pre-agreed cash surrender value written into the terms of the cover. Generally the amount is quite low.
• allowing the policy to lapse thus freeing yourself of the burden of paying the premiums but also losing the value of all the premiums already paid.
• collecting the value of the policy via the death of the insured individual.
Now, however, seniors can work through life settlement brokers who will offer a fair price for the value of the policy. Generally some requirements must be met, for instance, the policy holder must be a U.S citizen, 65 years or older, and must have been paying on the policy for a set number of years. Normally, there is no difficulty in meeting the requirements, however, and companies provide insurance professionals to counsel with the policy holder and to explain each step of the procedure. Often the sale and payment can be accomplished in a matter of days.
The insurance industry is built on evaluations of risk. Life insurance policies are generally sold to young people who fear that others will suffer financially in the event of their deaths. Senior citizens and retired individuals whose children and loved ones are already established suffer less from these fears and may truly need the financial value in their policies for their own economic well being. In these circumstances, it not only makes sense to sell your life insurance policy, it can make a real difference in the quality of your “golden years.”
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