Life Insurance Settlements - Cashing In Before Your Time is Up

2007-03-08 10:33:40

( Insurance )



For most people, possessing a life insurance policy implies that you have to "move on" before your family gets to avail of the proceeds from your life insurance.

However, there are some people who don't want to wait for that moment to happen. This is especially true if you are paying for a whole life or universal type of insurance. For such packages, you keep paying premiums until you reach a certain senior age. If you don't reach that age, your family will claim the insured amount. You get to enjoy the money only if you outlive the final year of your premium payment period, but you may be too old or feeble by then.

There may be compelling reasons why you would like to make a senior life settlement on your insurance before completing all the premium payments. Perhaps it's for your daughter's wedding, for paying off a mortgage loan, or for providing capital for your son's business. And perhaps the most heartbreaking reason of all is to finance your medical expenses for terminal illness.

Cashing in on your life insurance through your life insurance company is technically a pretermination, so you will be getting only a small percentage depending on how much you have paid up as premiums.

A better alternative is to sell your life insurance package through a company which handles life insurance settlements, also known as life settlements. You will name the company as your beneficiary, thus replacing all other beneficiaries you had in your policy.

If the life insurance settlements company keeps your policy, it assumes all remaining unpaid premiums, and will make a profit if the insured amount it collects after your death exceeds the premiums it has paid as well as the amount it has settled with you.

The life insurance settlements company can also choose to resell your policy to another party at an amount which is higher than the amount paid to you, thus it makes a profit with the difference. The third party becomes the beneficiary and continues the premium payments on your behalf, taking the risk that costs for keeping the policy does not exceed the insured amount.

There are numerous companies both online and around your area who are willing to invest in this type of deal. Find out how much each will be willing to pay for your policy before taking this option. Remember that what you can receive today as settlement amount will forfeit any future benefits for your heirs when you finally reach death's door.


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