How Life Settlements Work

A life settlement refers to the sale of a life insurance policy by the owner of the policy for less than the face value of the policy. The settlement is sold to a third party. This third party will profit when the insured dies by collecting more money in the death benefits that were paid out. The third party will receive higher profits the sooner the original policy holder dies. The policy holder can not have a catastrophic or life-threatening illness or condition in order to be eligible.

Life settlements are an attractive option for the policy owner who is above 70 years of age. It is estimated that among this age group, over half of the policies have a market value that far surpasses the cash value that is offered by the original carrier.

In this current economic uncertainty, life insurance settlements are becoming a very attractive way for many Americans to bring in some much needed money. Many people do not need the life insurance policy or they cannot afford to make the premiums any longer. Many Americans are concerned about their financial future today and life settlements or senior settlements as they are called, have become very viable alternatives for receiving money.

Many senior citizens in the United States are becoming increasingly aware and relieved that they can receive this money while they are still alive and that they do not need to make any more premium payments on the life insurance policy. Many senior citizens purchased life insurance years ago to fund a child's education in the case of their own death but now that the children are grown and out of college, they have no real need for the policy. In other cases, the policy may have listed the spouse as the beneficiary but the spouse has already died and perhaps the policyholder would rather have the money now rather than name a new beneficiary. These are a few of the reasons that life settlements are being sold now at rates never before seen.

There are many life settlement companies that assist people in selling their unwanted policies. These companies will work with the policyholder and ensure that they are given a lump sum payment. It is best to get some estimates from several of these companies before making a decision as rates may differ considerably.

Life settlements are an attractive option for the policy owner who is above 70 years of age. It is estimated that among this age group, over half of the policies have a market value that far surpasses the cash value that is offered by the original carrier. Many Americans are concerned about their financial future today and life settlements or senior settlements as they are called, have become very viable alternatives for receiving money.