Life Insurance Settlements

2007-03-08 10:33:40

( Insurance )



Life Insurance in General
Life insurance is an insurance that guarantees payment of a sum of money upon death of the insured person.

Life Insurance Settlements
While some insurance policies contain special attachments (called riders) which allow you to receive cash in case of disability, the face amount of the policy is not paid until death. The insurance policy has long been considered an asset which may be sold. In times of financial emergency, you may choose to sell your insurance policy through one of the many forms of life insurance settlements. Life insurance settlements involve the transfer of the right to receive the death benefit of a policy, in return for immediately available cash.

What Life Insurance Settlements Do Not Do
Buying life insurance settlements will not grant you life insurance on your own life. It is not a method to attain discount life insurance, or cheap life insurance. The purchase of a policy from the owner does not involve transfer of protection. The life insured will still be the original owner's.

What Happens To the Policy Because of the Settlement?
When the policy has been sold via a life insurance settlement, the right to receive the death benefit goes to the buyer. The settlement is embodied in a contract where the right to receive the benefit is sold. In return, a sum of money, usually less than the face amount of the policy, is paid to the owner. This discounted price does not purchase life insurance for the buyer. It does, however, purchase the right to receive the cash proceeds from the policy when the original owner dies.

Kinds of Life Insurance Settlements
Common life insurance settlements include viatical settlements, senior settlements, and cash settlements.

Viatical life insurance settlements involve the sale of the policy of a terminally ill patient. Senior life insurance settlements involve the sale of a policy owned by a person over the age of sixty-five. Cash settlements are simply the full sale of the right to receive death benefits from another person's life insurance policy. All of these life insurance settlements allow the owner to receive cash immediately.


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