Life Settlements: Betting on Life Insurance During a Global Pandemic
Life Settlements are a unique financial option that allows the owner of an unneeded or unwanted life insurance policy (typically someone over the age of 70) to sell it off to a third-party owner (typically a financial institution) for a percentage of the death benefit as a lump-sum while they are still alive.
It is the only financial option available that actually rewards the owner with higher re-sale value as they get older and sicker. During the coronavirus pandemic, seniors who own a life insurance policy are actually holding a very valuable asset that is increasing in value as the pandemic gets worse. Life insurance companies are reluctant to issue policies in today’s environment, but the life settlement market is booming.
Life insurance policies are one of the most valuable and stable assets a person can own because the death benefit is guaranteed for as long as premiums are paid for the policy.
Policy owners have the legal right to sell off a policy the same way the owner of a home has the right to sell that asset. The majority of people don’t realize that their policy has secondary market value and can provide a lump sum cash payment while they are still alive. Unfortunately, as many as 9 out of 10 policy owners will lapse or surrender their life insurance without realizing this – and after making premium payments for years! Would you abandon your home without selling it after years of making mortgage payments? Of course not, and no one should abandon a life insurance policy after years of making premium payments either. It is critical that the owner of a life insurance policy understands that they can use their policy while still alive to help cover the expensive costs of retirement, health care and long-term care.