Life Settlements

2007-03-08 10:33:40

( Insurance )



Life Settlements
Life settlements refer to the many kinds of settlements that can be entered into as regards a life insurance policy.

Kinds of Life Settlements

The viatical settlement is a settlement that is made between a terminally ill policyholder, and a third-party. This third-party is willing to buy the policy, and the attendant rights to collect the benefits of the policy. The catch is that the policy is sold for less than it is worth. This settlement allows the benefits of the policy to be used, so to speak, even before death. The terminally ill policyholder will thus have the money needed to take care of medical bills, hospice care expenses, and any other engagements during the last moments of life.

The Cash Settlement
The cash settlement, or full cash settlement, is entered between the beneficiaries of the policy, and the insurance company, after the death of the policyholder. This settlement is actually the fulfillment of the insurance company's obligations. A cash settlement is the payment of the benefits of the policy in full. Some beneficiaries opt for a periodic income settlement, which involves an intermittent payment of the benefits instead of a lump sum payment.

The Senior Life Settlement
The senior life settlement is a settlement entered into between the policyholder and a third-party that is willing to buy the insurance policy, which will give it the right to receive its benefits one day. The logic of this settlement is that a senior policyholder may want to use the benefits before death, but cannot do so by any negotiations with the insurance company. Similar to the viatical settlement, senior life settlements will allow the policyholders to enjoy policy benefits before death.

Trust Agreements
Trust agreement settlements take place if a trust agreement exists along with the insurance policy. This is basically a set of instructions given to the company and a designated trustee by the owner of the policy. The agreement will specify how the proceeds of the policy are to be used, for the good of the beneficiaries.

Structured Settlement
Some companies allow a choice from different structured settlements, which give options for periodic income, decreasing income, increasing income, and many other ways of distributing the proceeds of a policy.

Conclusion
The many kinds of life settlements allow the insurance policyholder many options for the use of the policy's benefits. The wisest choice of settlement is a question that is answered on a case to case basis.


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