Ever wonder why your life insurance company doesn’t advertise life or senior settlements? It’s actually in their best interest not to say a word because they make less money as a result of people who decide to go the senior settlement route. But still, what is a senior settlement and how can it be of any benefit to you?
Also known as a life settlement, a senior settlement is what happens when you sell your life insurance policy to a third party, such as a bank or similar financial institution. Basically, these life settlements are little more than lump sum insurance settlements that someone pays you for the death benefits your beneficiaries would receive from the life insurance company after you die, only you receive this money while you are still alive! Confused yet? Don’t worry, senior settlements are only mysterious until you see how simple they really are.
Basically, a company or an individual investor pays you a percentage of the death benefits that your beneficiaries would receive when you die. They clearly can’t pay you what your heirs would receive in a normal life insurance settlement because they wouldn’t make any money doing so. In addition, these companies and businesses continue to pay the premiums for your life insurance policy until the time of your death. They’re betting on how long you might live, so the younger you are when you enter a senior settlement, the lower the percentage they’re willing to pay out of your total death benefits. So what’s in it for you, and why even consider getting less money for your death benefits after paying those life insurance premiums for all those years?
The truth is, many of us buy life insurance when we are younger and less prepared for things like retirement. But as we get older, we honestly tend to need less and less life insurance because we’re generally better able to take care of our financial affairs than we were when we were younger. After our death, our loved ones have less to worry about right now, and therefore you may want to consider “cashing in” your life insurance policy. However, a senior settlement will generally pay much more than the life insurance company will give you in surrender value. This is because, unlike life or senior settlements, the insurance company will give you the money you paid in premiums, but most likely won’t give you any of the money they’ve earned in interest on your premiums over the years. However, a senior settlement gives you some of that money and will almost always exceed the surrender value paid by a life insurance company.
Senior settlements are not for everyone. But if you no longer need a life insurance policy that may have become outdated, and if you’re looking to increase your savings or simply have more cash to invest for your retirement, you should consider a senior settlement. Senior, or life, settlements are not as mysterious as you may think and you will get better results than simply cashing in your life insurance policy. Just find out what the surrender value of your life insurance is and then shop around for some senior citizen deals and you will be very surprised at how much more cost effective they are in comparison. And just like any other investment, make sure you know the real value of your life insurance before you sell it.