Just like any personal property, a life insurance policy can be sold or “settled”. This is called a life settlement.
The idea is to sell an existing life insurance policy to a third party for more than its cash surrender value but less than its net death benefit. In a life settlement transaction, the policy’s owner transfers ownership of the policy to the buyer in exchange for an immediate cash payment and, in some instances, a reduced interest in the death benefit for the policy’s beneficiaries. The buyer of the policy pays all future premium payments and receives the death benefit upon the death of the insured (when the policy matures).
A life settlement is different from a viatical settlement in that the individual insured on the policy has a longer life expectancy. In a viatical settlement, the life expectancy of the insured is 24 months or less.
Many American seniors—typically those 70 years of age or older—are discovering that life insurance policies that once seemed appropriate, have become unaffordable or no longer meet their needs.
As a result, many of these seniors lapse or surrender their policy back to the insurance carrier. In fact, policies with more than $100 billion of face value are lapsed by seniors over age 65 each year, mostly because they are unaware an alternative may be available – including the sale of the policy.
Consumers were paid over $750 Million by LISA Members for the sale of their unwanted life insurance policies
On May 3, the Life Insurance Settlement Association (LISA) released findings from its 2021 Annual Market Data Collection Survey. The data collected represents summary closing…
The Evolution of Regulations that have Benefited the Consumer
The life settlement industry was born in 1911 when Supreme Court Justice Oliver Wendell Holmes Jr. and his fellow justices ruled that life insurance is…
Combating Inflation with Life Settlement Earnings
Everything is getting more expensive these days. Gas prices are higher, food prices are higher, used car prices are higher—it seems like nothing right now…
How Did Insurance Policy Owners Earn $848 Million in 2020?
It’s true—according to “The Life Settlements Report” released by The Deal, 3,241 people sold their life insurance policies in 2020 for a combined total of…