Life Settlements

Life settlements can provide a means for people to tap into the value of life insurance and similar programs to provide them with the money they need while they are still alive. In a typical life settlement, the buyer would receive the full rights to the proceeds of the life insurance policy purchased, while at the same time agreeing to make all future payments to keep the policy in force.

In exchange the person selling the life insurance policy receives a lump sum payment in cash. This lump sum payment is a percentage of the cash value of the life insurance. That percentage will depend on the age and life expectancy of the person selling the life insurance policy, but in general payments are range from 50% to 85% of face value. For younger policy holders or those with a life expectancy of greater than five years, the payout amount may be reduced to 25% to 50% of face value.

Life settlements are often used by those facing terminal or life threatening illnesses. These types of advance settlements can provide the sufferer with cash they may need to pay medical bills as well as daily living expenses. These types of insurance settlements can be a good way to alleviate the financial burden a serious illness can place on family members. By providing cash in advance, the financial stress of the illness can be reduced or eliminated. This allows the family to focus on care and quality of life issues instead of finances.

Of course life settlements can be used by those not suffering from a life threatening illness as well. One common reason for life settlements is when the policy holder outlives the beneficiary of the policy. If there is no one left to pass the money to, the policy holder may wish to sell the life insurance policy they have paid so much into and use the proceeds to improve the quality of their remaining years.

Just about any type of life insurance policy is eligible for a life settlement. Whole life, universal life, term life and corporate policies may be eligible. As previously stated, the value of the life settlement will vary with the age and life expectancy of the policy seller.

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There is no limit to the dollar amount of a life insurance policy covered by a life settlement. A policy of any size, from the smallest to the largest, is eligible for sale through a life settlement.

The holder of a life insurance policy does not necessarily have to sell their entire policy. If a policy holder feels he or she is over insured, he or she may choose to sell a portion of the policy and retain the remainder. In this type of life settlement, part of the life insurance policy is purchased with a lump sum cash payment, and the remainder remains payable to the original beneficiary upon the death of the policy holder.

Life settlements can be an excellent way to tap the value of a life insurance policy while you are still alive. If you need cash now, you may want to look at this interesting option.