Types Of Life Insurance Settlements

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A life insurance settlement is defined as the selling of an active life insurance policy for a lump sum amount to any other interested part. However, sellers need to ensure that, the value of the policy received after sale is more than, its cash surrender value. Usually, a life insurance policy is considered to come into effect only after the demise of policy owners. By opting for life insurance settlement, policy owners have the choice to materialize, the value their life insurance policy during their lifetime. There are many types of life insurance settlements plans such as senior life settlement and vatical life settlement.

Life settlements mean selling life insurance policies to a third party buyer in exchange for a lump sum amount. They generate immediate liquidity from a non-performing asset. This allows policy owners, who are seniors over the age of sixty-five, to cash insurance policies that are unwanted, or have become too expensive to be affordable or have become obsolete. They are also known as senior settlements, lifetime settlements, or high net worth transactions.

Life settlements are now a necessary point to consider in the estate planning process for seniors. Before the introduction of life settlement option, there was no option for people above the age of sixty-five, who had an unwanted life insurance policy. They can lapse, cancel, or surrender their policies to the insurance company for the surrender value.

Viatical settlements are a goop option for people who are suffering from any kind of terminal illness. It allows them to make use of the current value of their life insurance policy. This helps them financially to pay for the expensive treatments required for their illness.

The popularity of life settlements has given rise to an industry that has, created a competitive secondary market for life insurance policies. Consumers now have the freedom to sell their policies in an open market for the highest obtainable value. This value is much more than the cash surrender value of the insurance policy.