A senior life settlement is when seniors, usually between the ages of 65 and 79, decide to sell their existing life insurance policy to another party through the assistance of a broker for less than its net death benefit total and more than its surrender value that they would get in cash.
A senior could want to sell their existing insurance policy for a number of reasons:
- The policy is no longer needed.
- The policy is no longer affordable.
- The seller may be interested in a more affordable senior life insurance policy.
- The policy holder doesn’t have anyone to leave any money to.
When it comes to life policies, seniors frequently face the problem that because of their age they can no longer afford their life policy, so their policy becomes too expensive to keep and a financial burden. Selling the life policy to an investor who will collect the policy’s payout when the time comes to collect it can relieve this problem. If this sounds interesting to you, keep in mind that once you sell your life policy for a lump sum, this policy now belongs to an investor and no one in your family will receive any amount from the policy.
Here are some questions that a senior should ask themselves when they decide to sell their life insurance policy:
- Is the provider or broker that you are trying to sell your life insurance policy to licensed? Many different states these days require that brokers and senior life settlement companies be licensed.
- Are you being pressured into making a decision quickly? A professional and legitimate investment pro will allow you enough time to get your questions answered and time to make a final decision.
- What are the consequences to selling your life policy when it comes to taxes? Make sure that you consult a tax professional before selling your life insurance policy.
- How will this affect the survivors of your family? Make sure that you answer this question as best as you possibly can. Once you sell your life policy, there is no going back.
- Will the investor adequately protect your personal information? Once you sell your life insurance policy to an investor, your medical records must be released to the investor. Make sure that the investor knows the best practices for keeping your information private.
To sum everything up, this guide gives you a basic understanding on what a senior life settlement is, why you may want to sell yours, and some questions that you should ask yourself when selling your life insurance policy.
