Many individuals purchase life insurance policies during their 20s, 30s, 40s or 50s in order to ensure that their family and loved ones are well taken care of in the event of their death. These policies, when purchased, were affordable to the insured and served a very important purpose in reassuring the insured that his or her family would be taken care of. However, what happens when one gets into his/her 60s, 70s and beyond? As one ages, one’s life situation changes and the needs that were present when younger, are no longer there, and the life insurance policy purchased 20 years ago may no longer be needed. What are the options? One may continue paying for a policy no longer needed, stop making payments and let the policy lapse, surrender the policy for a small cash value, or pursue the life settlement option.
A life settlement is the sale of a life insurance policy-usually insuring the life of an individual age 65 or older- to a third party for an amount greater than the cash surrender value. A life settlement provides the individual policy holder with additional cash flow and rids him/her of the premium payments. The purchaser then owns the policy and maintains the monthly payments, in return for the insurance payout after the insured has passed away. A life settlement can be a great way for seniors to get cash. Here are some benefits of selling your life insurance policy:
1. No more payments. Unless you purchased a fixed rate plan early in life, chances are the older you get, the more expensive your premiums will become. This rate may become too much for you to handle once you enter retirement and are forced to rely on a fixed income (LifeHealthPro, 2014).
Rather than continue to try and pay a premium that is unaffordable or simply letting the policy lapse, a life settlement might be the right choice for you. Not only will this option give you cash for the policy, but it will also get rid of the monthly bill thereby increasing your monthly cash flow.
2. Financial Hardships. As you enter into retirement and begin to rely on a fixed income, surprise expenses may be a disaster. For instance, your car may die or need costly repairs, your retirement account may take a hit due to a market decline or your house may need major repairs or renovations. All of these things can affect the quality of your life down the road. In addition, financial hardships can cause you to rack up debt and/or fall behind on other payments. By choosing to sell your life insurance policy, you may avoid all this by having extra cash on hand to deal with circumstances such as these.
3. Health Care Costs. Research suggests that as we age our health care costs may rise dramatically (AARP, 2012). These increased costs may be due to increasing health insurance premiums, chronic illness or life threatening disease. If you are relying on a fixed income, these additional expenses may be devastating to your monthly budget. Choosing to take advantage of the life settlement process can be a great way to provide you additional income to cover health related expenses.
4. Trip of a Lifetime. Most of us envision retirement as a time when we will be able to travel and enjoy the latter part of life. However, traveling anywhere requires money and if you are on a monthly budget you might not be able to afford your dream vacation without racking up major debt. Selling your life insurance policy can not only rid you of high premium payments, but can also put extra cash in your pocket to spend however you’d like—including going on that vacation to Hawaii that you’ve always dreamed of.
A life settlement may be a great option for seniors. It allows them to access benefits they may not have been able to otherwise access and gives them some return for the investment they have made over the years. For more information on the life settlement process or to get started today call Genesis Asset Advisors at 877-303-9777.
References
AARP. (2012). Health and Insurance Costs and Coverage. Retrieved from :http://www.aarp.org/health/health-care-reform/info-02-2012/health-insurance-costs-for-older-adults-before-medicare.html
Genesis. (2013). What is a life settlement? Retrieved from :https://www.genesislifesettlements.com/life- settlements/what-is-a-life-settlement/
LifeHealthPro. (2014). Life Settlements: fiction vs. reality. Retrieved from:http://www.lifehealthpro.com/2014/12/02/life-settlements-fiction-vs-reality?t=life-setttlements