Lapsing and surrendering a policy both end coverage, but they usually leave the policyholder with very little in return. When a policy lapses, the owner stops paying premiums and the policy terminates with no payout at all. All the premiums paid over many years are lost. Surrendering a policy is slightly better, but the cash value returned by the insurance company is often low compared to what the policy is actually worth.
A life settlement, on the other hand, allows the policyholder to sell the policy for a cash amount that is typically much higher than its surrender value. The buyer becomes the new owner, takes over all future premiums, and receives the death benefit later. The original policyholder receives a lump-sum payment today and no longer has to make premium payments. This option is especially helpful for seniors who cannot afford rising premiums or no longer need the coverage.
While surrender and lapse might feel like the simplest solutions, they often leave money on the table. A life settlement gives seniors a way to capture value instead of losing the policy entirely. For many people facing tight retirement budgets or unexpected medical costs, this can be a meaningful financial alternative.
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