Sell Settlement
You and your spouse are of retirement age. You've sold your business, your mortgage is paid off, and you're free of debt. If you fit this description, you might be considering life settlements or "senior settlements." This is where you sell your life insurance policy to a third party, which in most cases is an investment company.
For some, a life settlement can be an attractive option. It allows you to receive a large sum of cash in exchange for your insurance policy when you are still alive, it eliminates premium payments, and it accommodates the changing needs of dependents.
Life settlements have raised many questions in the insurance industry, including concerns about possible insurance and investment fraud. Several insurance companies and trade groups warn policyholders about the consequences of selling their policies to third parties.
How it works An investment company buys a life insurance policy by paying a percentage of the policy's face value to the seller. Among the factors that contribute to the selling price are the death benefit of the policy and the medical condition and life expectancy of the policyholder. When the company buys the policy, it pays all future premiums and collects the entire death benefit when the insured dies.
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