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Why would someone do this? While
a life settlement is surely not appropriate for every person, there
are many cases where this type of sale makes perfect sense. Most
life settlements occur when a person decides they no longer need the
insurance or wish to pay the premiums. In the past these people
simply called the insurance company, requested a check for their
cash value and cancelled the policy. Or in some cases they would
simply stop paying the premium and let the cash value run out until
the policy cancels itself.
With the advent of the Life
Settlement these same people now have another choice. They now have
the ability in many cases to sell their policy to the Settlement
company for MORE than their current cash surrender
value. Without doing this they essentially throw away thousands or
in some cases hundreds of thousands of dollars.
Some other cases where a Life
Settlement might make sense:
-
The current policy is performing poorly and you
want to replace it for a more efficient one.
-
The policy was purchased to act as collateral for
a loan which has now been paid.
-
You have outlived the intended beneficiaries or
the needs of your beneficiaries have changed.
-
Events in your life have caused you to either
need more or less insurance and this policy is no longer
necessary.
-
Premiums have become too costly and the monthly
savings along with the cash payout can be better used elsewhere
-
You might simply feel that the money can better
serve you now, rather than later.
Why
wouldn’t the insurance company tell me about this?
They have no incentive to! It is in their best interest for you to
lapse your policy, it means they don’t have to pay the death
benefit, which means more $$$$$
for them. |
