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    February 01, 2016

    A Short History of Life Settlements

    A life settlement is the sale of an existing life insurance policy to an institutional investor at a price higher than the current cash surrender value, but lower than the face amount of the policy. The investor then takes over all the premium obligations and the original owner is relived of the ongoing financial burden while getting a lump-sum that is a lot more than the insurance company told them it was worth if it was surrendered. If a policy does not have cash surrender value, for example with a term policy, a life settlement is still usually possible because most term policies are convertible into cash value policies and, because of that nuance, they can be monetized as well.

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