When is a Life Settlement Worth it?

Life settlement refers to the act of selling a life insurance policy to a one-time cash buyer or a third party. Usually, the payment is less the value of death benefits, but more than the surrender value.

The buyer will automatically assume all the premium payments and ultimately become the beneficiary of the policy. While it’s a personal decision, a life settlement can help to get you out of a financial fix.

How it works

Life insurance is designed to help take care of your loved ones in case of untoward happening. This means that the bereaving family will receive the sum assured including the bonus benefits. One thing to note, however, is that individuals who are still healthy and almost to hit their life expectancy have the option of selling their life insurance policies because of various reasons.

The life expectancy for men is currently at 70 years while that for women is 74 years. With a life settlement, the closer you are to your life expectancy, the more you can expect from a life settlement. 

There are other factors that increase the value of your life settlement, these include:

  • Your life insurance policy exceeds $250,000
  • Your insurance policy includes high death benefits
  • You are closer to your life expectancy, ill, but not terminally ill.

Individuals who are at the ages of between 70-75 and insured but no longer see the need for a life insurance policy are considered to be the best candidates for a life settlement. While there are so many reasons why you should consider a life settlement, the question is, when is a life settlement worth it?

When you can no longer afford the premiums

To some, this may sound a little morbid and weird, but truth be told, selling your life insurance policy is an option that can help to take care of you and your family. Now, depending on the policy terms, fluctuations in the insurance market can drive the premium prices to rise. If you have no job or other sources of income, it can force you to surrender your policy.

Some of the best life settlement companies will advise you to opt for a settlement when facing financial hardships due to legal issues, rising medical bills, or when you can no longer afford to pay for your premiums. 

The financial benefits of selling your insurance premium include:

  • Settling your medical bills
  • Paying off debts
  • Relieving yourself from the obligations of paying insurance premiums
  • To have enough to cover for your living expenses

To fund an investment

As it turns out, a life settlement can provide you with the capital you need to fund an investment. As earlier mentioned, the most deserving candidates for a life settlement are individuals who are at the ages of 70-75 years. While it can seem a little late to invest at this age, there are viable investment options that can give good returns on investment within no time.

These include trading in the forex market, shares, bonds, and certificates of deposit. Investing in real estate, especially in rental properties is another great way to have your money work for you in your sunset years. However, it’s important that when considering investment options when you’re older, to give priority to short-term options.

To pay off your mortgage

It makes sense to want to have a retirement home that is free from debts. A life settlement can help pay your mortgage loan, leaving you free from monthly repayment obligations. It can also be used to pay off your credit cards among other debts you may owe.

Why most people chose a life settlement

Various life situations lead people into considering life settlement. But these reasons will vary from one person to the other.  Below are the reasons why most people chose life settlement:

  • Financial benefits
  • Stress reduction
  • It’s a fast and simplified process
  • Saving on premiums

How to enter into a life settlement deal

If you’re interested in selling your life insurance policy, the first thing is to have your policy assessed. This will help to determine the value of your policy. In addition to this, it’s also imperative that you involve an advocate. This is in case you feel more confident in having one. Lastly, you’ll need to work closely with a life settlement provider to help you with the process.

On a parting shot, there’s no need to keep struggling with medical bills, debts, and mortgage if you have a life insurance policy and don’t need it. Most people do not know how valuable their life insurance policies are. Today, you have the option of surrendering it and converting it to cash. This will help take a huge load from your shoulder and help you to get going. So if you are in a jam, your life insurance policy can be a quick fix. In a nutshell, it’s worth it!