A life settlement, also known as a senior settlement, allows you to sell your life insurance policy and convert it into cash in a secure financial transaction. If you own your life insurance policy, you may be eligible to engage in a senior settlement to turn your life insurance policy into a true asset, just like real estate or a stock or a bond, but without being exposed to market fluctuations.
Before taking such a step, you will want to consider a few factors, both financial and personal, in order to maximize the value of your life insurance policy. Life settlement companies are the financial experts and professionals who can guide you through the process of evaluating the benefits of a senior settlement.
Current Health Status
As with buying a new life insurance policy, one of the first factors when considering a senior settlement is to assess your current health. You do not want your health status to preclude you from securing a new life insurance policy before you sell the one you currently own. Better safe than sorry. A life settlement company will help you determine your health status and any issues which may influence your decision.
Your Financial Situation
A hard look at your financials and cash flow is required when you are considering a senior settlement. First, look at your current life insurance premiums. The monthly payments may no longer be worthwhile for the amount of coverage you currently own, and the ability to change a monthly debit into a cash value asset can be an enormous financial boon. A senior settlement can liquidate your life insurance policy, allowing you to increase your cash on hand while still giving you the option to purchase a smaller sized life insurance policy to fit your needs if you so desire. When looking through the numbers, be sure to consult a life settlement company specialist in order to make sense of the dollars and cents.
Insurability
Next, you have to examine your total insurability. Even after selling a life insurance policy, the life insurance policy is still insuring you, which means you are no less insured in the consideration of the life insurance industry. Just like the credit limit on your credit cards, you have a limit on your total insurability. It is never a good idea to be without any coverage at all, so if you enter into a life insurance settlement you may want to still purchase a smaller life insurance policy. Your life settlement company will keep this in mind so you do not find yourself with zero insurability in the future.
Industry Options
One of the great benefits of a senior settlement is that your asset is not tied to the stock market or even to the overall economic situation. Even in a recession, as long as institutional investors who buy life settlements remain attracted to life settlements your investment will remain strong. Ultimately, you want to consult your life settlement company and their advisors to weigh the variety of options available to you. They will make sure your decision is the best one for you, your family, and your unique needs.
Christine O’Kelly is a writer for David Mickelson Insurance Services, offering life settlement services and brokers. Mickelson Life specializes in providing financial services and senior life settlements with the utmost care and respect for each client’s unique situation.