Life Insurance Settlement

A life settlement is the sale of a life insurance policy to a third party for a sum greater than the policy's surrender value while less than it's benefit.

The secondary marketplace for unneeded, unwanted, or unaffordable policies is significant.

The amount if life insurance policy settlements is estimated at $6 billion each year. Mutual funds, pension funds, and investment banks are typical buyers. Transactions and regulatory procedures are thorough and administered vies a vie an intermediary, known as a life settlement broker.

The broker plays an integral role in the settlement process including qualifying, underwriting, and sourcing potential policy suitors and oversight of meeting state compliance and fiduciary requirements involved in every transaction.Senior citizens tend to pursue selling life insurance policies for a few specific reasons:

1. Obsolete. Meaning they can buy more coverage, previously unavailable features or the same amount of insurance coverage for less money today than they pay on an existing one.
2. Part of financial planning strategy. Sometimes, a CPA or investment advisor will recommend a senior citizen liquidate an insurance policy and use those monies to pay for something else.
3. Policy premiums increase and become unaffordable, thus leaving its owner three choices: 1) pay more for same item, 2) surrender policy for somewhere between three to five percent of its benefit amount, or 3) contact a life settlement financial services company, have it appraised, and consider a life settlement.