3 Questions That Can Help You Decide If a Life Settlement Is Right for You

Green Settlements Staff

Table of Contents:

  1. Are my insurance premiums becoming a burden?
  2. Have I experienced a major medical event or change in my health?
  3. How will my beneficiaries fare without access to my policy’s death benefit?

When it comes to matters of the wallet, it can be tough to know exactly which potential purchases or investments will work out in your favor. This is especially true of older adults who often are particularly vulnerable to nefarious schemes, scams and fraud. But even for seniors with limited financial acumen, there are safe options that promise monetary relief during times of need.

One option that’s growing in popularity among senior citizens is a transaction known as a life settlement. This type of transaction takes place on the secondary market and is defined by the Life Insurance Settlement Association (LISA) as “the sale of a life insurance policy to a third party for a value in excess of the policy’s cash surrender value, but less than its face value, or death benefit.”

In order to qualify, you must be 65 years of age or older, and you must own a term, whole or universal life insurance policy with a face value of at least $100,000. However, even if you meet these basic criteria, it doesn’t necessarily mean a life settlement is right for you.

To get a better idea of whether a life settlement is a good fit based on your personal financial situation, ask yourself these questions before making any decisions.

Are my insurance premiums becoming a burden?

Many seniors decide to ditch their life policies when monthly or annual premium payments become too costly. Depending on the structure of the policy, premiums may even increase—in some cases, quite dramatically—as time goes on. If you are on a fixed income and struggle to budget for life insurance, you might be better off selling your policy and using the payout to pad out your savings, for example, or take care of other expenses.

Have I experienced a major medical event or change in my health?

Expenses such as medical bills, therapy and homecare add up quickly and can have an outsized impact on your ability to afford your insurance premiums month over month. Life settlements work well for seniors suffering from a chronic or terminal illness, and many choose to allocate their settlement money to cover rising healthcare costs.

How will my beneficiaries fare without access to my policy’s death benefit?

If you’re like most policyholders, you probably named your spouse and/or children as beneficiaries to your life insurance policy. In addition to assessing your own financial circumstances, it’s important to consider your beneficiaries’ fiscal status. For instance, if your children are fully grown and financially independent, they may no longer have a need for the death benefit. The death of a spouse may also eliminate your need for life insurance if they were the sole beneficiary on the policy.

Life settlements can be used as a powerful defense against financial strife, but they are not for everyone. By weighing all of your options and speaking with an experienced financial advisor, you can be sure to make an informed decision. To find out if you qualify for a life settlement, apply for a quote today.

bbb seal