Why a Life Settlement Might Be the Best Financial Decision You Can Make Part 3

With the ability to sell a life insurance policy for a lump sum, seniors can access cash that would otherwise be locked away until their passing. In this blog post, we'll explore why a life settlement might be the best financial decision you can make.

  1. Access to Cash: 

One of the most common fears among retirees is the fear of running out of money. Many retirees worry that they will not have enough money to support themselves in retirement, especially as they get older and their expenses increase. This fear can be particularly acute for those who did not save enough during their working years or who experienced unexpected financial setbacks, such as a medical emergency or market downturn. For the 7% of seniors still supporting adult children, the pressures on their savings and income are unmatched.

By selling a life insurance policy, seniors can quickly access the cash they need for retirement, medical bills, long-term care, or other expenses. This can provide much-needed financial flexibility and peace of mind during the golden years.

  2. Better Than Surrendering the Policy:

Each year hundreds of thousands of life insurance polices are voluntarily surrender by seniors for various reasons. For policyholders that have term insurance, surrendering the policy locks in a financial loss that will never be recovered. For those with permanent policies that loss may be less intense, but not always.

When a policy is surrendered, the payout is typically much lower than what can be obtained through a life settlement. Selling the policy can result in a much larger payout, which can be a better option for seniors who need cash or want to recover the cost of their insurance.

  3. No Ongoing Premium Payments:

Once a policy is sold in a life settlement, the new owner is responsible for the ongoing premium payments. This can provide relief for seniors who may struggle to keep up with premium payments or simply want to eliminate the ongoing cost.

Charles benefited greatly from this advantage. For years the business that bought his company was paying Charles an additional $5,800 per month that he used to pay the premium of his life insurance policy. When needs changed, Charles decided to sell the policy. Not only did Charles receive $3.6 million in cash, but he also received a $5,800 monthly raise to his income.

  4. Improved Quality of Life:

Access to cash from a life settlement can improve a senior's quality of life by providing funds for things like home modifications, travel, or other enjoyable activities. This can help seniors live their lives to the fullest without worrying about finances.

Take Cal for instance. At age 77 he was still working to support his wife, pay his mortgage, and pay for his life insurance, that was needed to cover his mortgage payoff. By entering into a life settlement he received enough cash to eliminate his mortgage payment, while also eliminating his high life insurance premium. This one decision allowed Cal to retire, and he now spends more time doing the things he loves.

In conclusion, a life settlement can provide significant financial benefits for policyholders who no longer need or can afford their life insurance policies. However, it's crucial to approach this process with caution and work with a reputable life settlement broker to ensure a fair and favorable outcome.

We hope this three-part series has been informative and helpful in understanding the basics of life settlements, things to watch out for, and the potential financial benefits they can offer. If you're considering a life settlement, we encourage you to explore your options and reach out to a qualified broker to discuss your individual needs and goals.

Thank you for reading, and don't forget to check out our other informative blog posts on topics related to life settlements, life insurance, and personal financial planning.

Read Part 1 "Understanding Life Settlements"

Read Part 2 "Avoiding Pitfalls: What to Watch Out for with Life Settlements"