Most life settlements occur because the circumstances which originally prompted the purchase of the life insurance policy have changed. For example:
- The policy owner no longer needs coverage
- The beneficiaries of the insurance policy die before the person covered by the policy
- A change in business ownership makes the policy unnecessary
- The policy has not performed as expected or premium payments have become burdensome
- A change in policy type or coverage amount is necessary to address current objectives
Financial Benefits
There are clear financial benefits to a life settlement. Life settlements offer policy owners an immediate and significant lump sum payment and relieve them from the burden of paying future premiums. The money can be used for:
- Purchasing investments or other insurance products
- Maintaining lifestyle
- Funding long term care
- Making gifts to heirs or charities
- Achieving other financial objectives
Better Than Lapse or Surrender
A life settlement is the more lucrative alternative to letting the policy lapse or surrendering it to the issuing insurance company. Whenever policy owners are considering lapsing or surrendering a life insurance policy for any reason, they should explore the life settlement option with their financial advisor.
