From The Rock

Can you, or an older person you know, actually make a good cash settlement for an unwanted life policy? It is possible, and these days, life settlements have become popular.

In general, investors actually buy the policy, become the benefiary, and offer to pay future premiums. They hope to make a profit when the insured person does pass away. In return, the seller gets cash they can use now.

This can be an attractive option for many senior citizens who need money to live on, and are not as concerned about heirs who would get a death benefit later.

This gives older people another option. Before people could just stop paying and let the policy lapse, or they could give up the poliy for a small cash value.

These days, life settlements present a much better choice.

Who gets to consider life settlements?

Most of the time, the insured person must be at least 70 years old, though someimes a younger person will be considered.

Do All Types of Life Insurance Work?

The life insurance policy must be whole or universal life insurance because that is permanent. Term may work with a guaranteed convertible rider.

If you have term life, make sure you start shopping while you have plenty of time left on the contract. A term policy that cannot be converted to whole or universal life will not qualify though.

Is this a good idea?

Life settlements for insurance are not for everybody. But they can be great financial tools for some.

This decision will keep the present heirs from collecting the death benefit. It is cash now in exchange for giving up the death benefit later.

Life settlements are also considered by businesses. The company may have covered an owner or key man who does not work for them any more. They can use the policy to raise money, rather than paying a premium on a person who does not work with them any more.

How much are these policies worth?

There is a competitive market, and a qualified person may have to do some shopping for the best deal. But I have seen many people get paid a large percentage of the final death benefit in exchange for the policy. Of course, the investor wants to proft by collecting the benefits when the insured person dies. But since the market is competitive, they will certainly be willing to make a good offer.

How can a person find out more?

If you think a life settlement will help you, consult a life settlement broker. These professionals can advise you, and they can help you find investors to make offers.

In the end, the decision will belong to the policy owner. The owner is not always the insured person, but many times it is.