When discussing life settlements, you need a foundation of understanding to build upon. With this in mind, let’s start with an answer to the question of what are life settlements?

Perhaps the easiest way to answer this question is with a simple example. Let’s assume you buy a life insurance policy in your 60’s. It has a million dollar death benefit and you can accrue cash in it. The policy requires a yearly premium payment to keep it from lapsing [expiring].

Ten years pass and you retire. Suddenly you start having major health problems. Your health insurance covers part of it, but then the medical bills start consuming your retirement savings. You really don’t want to spend the money on the yearly premium for the life insurance. You start borrowing money out of the cash value of the policy, but soon use up everything you can take. 

Now what? 

We step in. We will take your policy and look for a buyer. There are groups of investors that buy policies because, frankly, they are good investments. We will get you a lump sum cash payment up front for the policy. The investors, in turn, receive the right to the death benefit of the policy and they will take over the premium payments. It is as simple as that. 

So, how much will they pay you for the policy? There are no hard and fast rules. The determining factor is your health and an actuarial table that tells them how long they can expect you to live. This is pretty much the same thing a life insurance does when issuing you a policy. 

Generally, you can expect purchase amounts to be 10 to 30 percent of the policy death benefit. In our example above, the payout would be between $100,000 and $300,000 on the million dollar policy. That is a considerable amount of money. 

If you would like to learn more about your options with life settlements, please contact us at (800) 341-5433 or via this contact form for a no pressure consultation.