A senior life settlement is a transaction wherein the owner of a life insurance
policy sells that policy to an investor. Investors are paying 10-20% of the face
amount under the right circumstances. Some analysts have estimated that the
senior life settlement market will grow to over $100 billion. How is this
possible? Where did this market originate?
It turns out that over 90% of life insurance policies never make a payout. This is
because most people let their policies expire or turn them back in to the life
insurance company for a small settlement. Companies have factored this in to their
pricing, resulting in policies which are a bargain, especially in the senior market.
In fact, if you are 70 or older with a policy of over $100,000, investors have been
paying 10-20% of the face amount for a life settlement.
But why sell such a valuable asset to an investor rather than leave the face amount
for your children? We recommend that you keep the policy unless you can no longer
afford it, or if you have no children or other beneficiaries to whom you would like
to leave a gift.
On the other hand, if you can no longer afford the premiums, or you have no other
use for the policy, you certainly should obtain and independent life settlement
quote before you obtain a settlement from the insurance company or just let it lapse.
Case Study:
Here is an actual case history that describes a typical case sought
by investors:
A 77 year-old male
He held two UL policies totaling $2 million
The total premiums he paid on the two policies totaled $60,965.00 annually
The client wanted to reduce his annual premiums while maintaining similar coverage.
The client completed a life settlement, and then used a portion of the $610,000 offer
to purchase a new $1 million single premium universal life policy.
The client saved $60,000.00 per year in annual premiums but still maintained
the coverage he sought.
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