For seniors who are finding their current life insurance policies are not suited for their needs, there are options available such as a life insurance settlement. This method is the most suitable for seniors over 65 years.
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What is a Life Insurance Settlement?
Basically, a third party purchases your life insurance policy for cash up front. In this case, the third party becomes the policy holder and can now dictate where the benefits will be delivered. However, in most cases the party that purchases the life insurance policy will either sell it themselves or cash out the value for a quick profit.
For seniors in particular, this is a way to deal with an old policy that no longer fits their needs, particularly if it was designed to cover their children who have now moved out on their own.
How does it Work for Seniors?
For senior life insurance settlement, it is simply a matter of finding a third party which is usually an investment firm or other organization that specializes in purchasing these types of policies. In fact, you may be able to get bids from different companies to see which one will pay you the most for your policy.
The actual transaction is fairly straightforward as the purchaser takes over the policy for an agreed price. Seniors wind up with cash in their hand and the investor gets the policy to do with as they please.
Reasons Seniors Consider a Settlement and Sell their Policy:
There are a number of reasons why life insurance settlement for seniors is a good method for their particular situation.
- Can no longer afford to pay the life insurance premiums
- Benefits are out of line with needs
- Cash can be used to purchase other, better life insurance policies
Basically, seniors can do what they want with the cash which includes investing it in new policies. However, the main use is to get money for a policy that they can no longer afford to pay the premiums.
Benefits of Senior Life Settlement:
The benefits of having this type of settlement are certainly worth considering for seniors who may already be covered by other investments.
Cash for Worthless Policy: If the life insurance was no longer suitable because it was designed for covering children who have now grown up and left the home, then it’s well worth the settlement.
Better than Surrender Charges: Policy holders can expect to receive up to eight times the amount for choosing the settlement over standard surrender charges.
In addition, settlement can be done fairly quickly depending on the party purchasing the policy. For many seniors, this can be a quick, satisfying option in dealing with life insurance that is no longer needed.
Alternative of Life Insurance Settlement for Seniors:
The most popular alternative to life insurance settlement is surrender charges which is when the life insurance company basically refunds a percentage of the premiums that have been paid. While the amount of the settlement is usually less than the death benefit, it is also usually far greater than surrender charges and may be the best method for cashing out an otherwise outdated or perhaps unaffordable life insurance coverage.