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Life Insurance Settlement

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Life Insurance Settlement

Life Insurance Settlement

Life Insurance settlement means selling of your life insurance policy to a third party investment company. One can have life insurance settlement if their policies are of permanent types, or their policy accrues cash value over its life span.

It is the seniors who mostly go for life insurance settlement. This is because they do not have dependents (their children, if any are grown up and make their own incomes). They also do not have to provide financial protection to their spouse, who is living their life out of pension and / or savings from retirements. Seniors are also debt-free and they pay their mortgage fully and there are not many debts to worry about.

Life insurance settlement is a good option for the policy holder to receive cash by making use of their policy while they are alive. One has to know for sure whether a settlement is the right option for which one has to be well aware of the process.

Life insurance settlement benefits

After you sell your life insurance policy, it is the cash that you only profit out of the settlement. You will no longer receive any premiums that are paid later since you do not own the insurance policy. Again, the percentage of the value of the policy that the investment company pays is quite bigger with respect to the cash value that is received with the surrender of the policy. The money received can be of significant importance for supplementing your estate planning, retirement, extended care or investing in some other opportunities.

Drawbacks of life insurance settlement

If your sell your life insurance policy, you do not have access to the coverage available. That also makes your beneficiaries unable to get insurance benefits in the event of your death. If for some reasons your health worsens, you cannot get another policy in place of the one that you sold out.

Nowadays, the media is filled with insurance and investment frauds and scams. This has made it important to make a thorough research on companies that are known to buy policies so that you may not entangle yourself with any scams.

As with every decision with respect to life insurance, make careful research to be sure that the company to whom you are planning to sell has the necessary reputation and license. Search around for the best settlement amount that you can get for your policy.

Profit for the investment company

The investment company buys your policy for a lesser value and makes regular premium payments and gets the death benefit when you are gone. The benefit however, comes after your death but the amount of profit is quite good.

What is best for you?

If you sell your policy back to the insurance company from whom you purchased the policy, you get a lesser amount compared to what you get by selling your life insurance policy to an investment company.


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