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The Truth About Life SettlementsBy Expert Author: Tony Barber
Though their roots go all the way back to the 80s, Life Settlements have been getting more and more time in the press as of late as they have grown in sophistication and as the economic times have made them more attractive. But what is a life settlement and is it right for you? Read on to find out.
What is a life settlement?
Put simply, a life settlement is when someone sells their life insurance policy to a third party for less than the net death benefit but for more than its cash surrender value. The reason for the sale can range from a need for money due to unexpected medical bills to the policy holder no longer being satisfied with its performance.
Who should consider one?
The demographic a life settlement best suits is someone who has a policy that is underperforming, no longer affordable or no longer wanted for some other reason. The policy holder should have a net death benefit of at least $250,000 and they should be at least sixty five years old with a life expectancy of twelve more years or fewer. This is generally how most settlement companies will describe their target market upfront.
Who should consider a life settlement?
To expand on the issue of a policy the holder no longer wants, one issue may be combination of the above. If medical bills are piling up, for example, having cash on hand is a real benefit. But furthermore, those bills might otherwise mean a lapse or surrender of policy. In that situation, a life settlement kills two birds with one stone. This is an even more attractive offer if the policy holder has other assets or investments they want to pass on to their children or beneficiaries. An example of this would be a business. While selling it would turn a profit and leave their life insurance policy intact, that business has the potential to provide for generations to come. A life insurance policy is done once it has been cashed out.
The other side of that coin is people who simply don’t need their policies anymore. Too often people see life insurance policies as an absolute must have. More and more people start them when they’re quite young and it just seems like something they have always had and always will. But what if, since the young age when you started them, you have since done well financially? Your investment portfolio may have done well; you may have saved throughout the years; real-estate investments may be turning considerable profits; or the business you’re in or started may have set you up comfortably. In those scenarios, it makes sense to consider that a life insurance policy is no longer worth it. If you have an estate that covers all your concerns, life insurance is money you will never see and that your loved ones may never need. Why not cash it out now and enjoy it or use it to add cash flow to one of your other income sources or investments?
To know more information about what is a life settlement. Please Visit Here http://www.alifesettlement.com/what-is-a-life-settlement/.
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