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.