A life settlement is the sale of an existing life insurance policy (typically by seniors) for more than its cash surrender value, but less than its net death benefit. In certain cases, the proceeds may be tax-advantaged and can be used for retirement, to pay medical bills, fund long-term care, or anything else you wish–it’s your money to use however you want.
There are a number of reasons that a policy owner may choose to sell their life insurance policy. They may no longer need or want their policy or the premium payments may no longer be affordable. Or perhaps the reason they initially purchased the policy no longer exists, such as the insured has outlived the beneficiary, their children are grown and financially independent, they’ve sold a home or business, or one of many other reasons.
Instead of lapsing or surrendering the policy for little to nothing, selling the policy enables the policy owner to tap into the market value of the policy, which is on average four times more than the cash surrender value. If you meet the requirements below, we highly recommend having your policy evaluated if for no other reason than to understand the market value of this asset.
The minimum age to qualify is 65, though younger insureds with significant health impairments may qualify.
Any policy type – including term – with a death benefit of $100,000 or more could qualify. There is no maximum death benefit.
A decline in health isn’t always necessary to qualify, but health impairments may increase the market value of your policy.
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