Life insurance settlements convert your illiquid asset into cash in hand. In this article, we take a look at the many advantages of life insurance settlements and why they are so popular these days. 

Life insurance is primarily an estate planning tool although it can be used in business planning as well. As such, it is designed to convey a cost now in exchange for a benefit later. In this way, it is much like owning a home with the rather obvious exception that you can’t live in it. Any financial benefit that you receive will come on the back end of the life of the product, to wit, when it pays out upon your death. 

The problem with a life insurance policy should be obvious. What if you need cash now? With a term policy, there is no way to pull cash from the policy. Even with the policies that do allow for cash values to build up, loans can quickly consume the vested amount that can be borrowed. Either situation leaves you once again with an illiquid asset that is only going to pay out after you are gone from this green Earth. 

The advantage of life insurance settlements is they convert the illiquid asset to a liquid version. This is done by selling them for a lump sum cash payment. Think about it. You currently own a policy that you make regular payments on that will never pay you back a dime other than perhaps through loans against the cash value. By selling the policy, you generate cash now that can be used to pay bills or create a quality of life you desire in your golden years.

Another advantage is a bit more practical. You don’t have to pay the premiums anymore. As we hit our golden years, our earning power tends to diminish. At the same time, premiums for life insurance policies tend to escalate. Being able to eliminate the premium payments saves you money while the sale of the policy obviously generates it as well. 

If you would like to discuss both the pros and cons of life settlements as well as the options available to you, please contact us at (800) 341-5433 or via this contact form for a no pressure consultation.