A life settlement is the process of selling an existing life insurance policy to a licensed buyer in exchange for an immediate cash payment. Instead of keeping the policy, continuing to pay premiums, or surrendering it back to the insurance company for a small value, the policyholder transfers ownership to a buyer who takes over the future premiums and eventually receives the death benefit.
Life settlements are regulated transactions, which means the buyer must be licensed, the seller must receive required disclosures, and the entire process is designed to protect consumers. Many seniors consider a life settlement when they no longer need the policy, when premiums have become unmanageable, or when the policy is close to lapsing. The cash received from a settlement can be used for anything, including medical bills, long-term care, home expenses, or simply improving quality of life in retirement.
Most people are surprised to learn that their policy is legally considered private property, which means it can be sold just like any other asset. A life settlement often pays significantly more than surrendering a policy back to the carrier, especially for universal life, whole life, or convertible term policies. While every case is unique, the goal of a life settlement is to help seniors unlock real value from a policy that may otherwise be lost.
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