A life settlement is where you, the policyholder, sell your life insurance policy to a third party for a lump sum cash payment. The buyer becomes the new policy owner, assuming responsibility for paying all subsequent premiums. Also, they receive the death benefit upon the insured person’s passing.
As such, we can say that a life settlement is a legal way of converting your insurance policy into usable cash. And speaking of cash, the settlement amount is often higher than the policy’s surrender value, that is, the amount the insurance company would pay if the policyholder were to surrender or terminate the policy before the insured person’s death.
However, it is lower than the death benefit, which is the amount that would be paid out to the policy’s beneficiaries upon the insured person’s death.
So, when should you pursue Abacus Life settlements?
1. When Premiums Increase
The insurance market changes with time, causing premiums to rise. When this happens, it can become challenging for you to keep up with the higher premiums. And so opting for a life settlement makes sense.
Many policyholders approaching a policy lapse can either surrender their life insurance policy or make a life settlement. The former is not ideal because it means forfeiting any potential benefits and receiving only a fraction of the premiums you forked out over time.
However, by making a life settlement, you can receive a lump sum payment to determine your needs. Moreover, you get the liberty to pursue more reasonably priced options.
2. When Planning Your Retirement
Another instance when it is sensible to consider a life settlement is when you have retirement benefits in mind. Planning for retirement often entails assessing your income sources, assets, and even life insurance policy. As you get older and close in on retirement, you might realize that maintaining your policy and paying premiums no longer aligns with your financial goals.
In this case, it makes sense to pursue a life settlement instead of letting the policy lapse or surrendering it for less cash value. By selling your policy, you can free up a considerable amount of cash that can cater to living expenses, trips, and other financial needs that come up at retirement.
3. When Facing an Emergency, e.g., Illness
A life settlement is also a viable option when grappling with a serious emergency. For instance, an expensive medical condition that affects you or your immediate family. As mentioned, a life settlement allows you to unlock a lump sum of cash, which can help you offset medical bills.
And besides getting the money to cover the medical expenses, you have the peace of mind to focus on your health and improvement. This lets you quickly get back on your feet and take charge of your life after a medical emergency.
4. When You Can No Longer Afford Premiums
Life is ever-changing, and you can never really know of tomorrow. That’s the point of life insurance. However, your financial situation can change when you least expect it. For instance, you may lose your job and have difficulty securing a new one. Or you invested in a business, and it’s not doing too well. Even something as normal as an increase in household expenses can make paying your policy premiums burdensome.
In this case, you can look for a reasonable life settlement for some ready money to get you back on your feet.
5. When Policy Is Unnecessary
You might realize that your life insurance policy is no longer necessary as you go through different life stages. For instance, you may have taken the policy to safeguard your children financially after your demise. But then they grow up and have stable lives, meaning they no longer have dependents.
In such a scenario, surrendering your policy to the insurance company is not sensible, as you are bound to receive a minimal payout. An ideal option is to pursue a life settlement as long as you are eligible.
With a life settlement, you get to steer clear of the small payout you receive after surrendering your policy and receive a more reasonable cash amount. If you are facing a cash strain, this will undoubtedly be a welcome move.
Of course, to qualify for a life settlement and receive your cash lump sum, certain conditions must be met. These considerations include the policy’s face value, the insured’s age, health condition, and the premiums paid to date. Consult with your life settlement provider to get a better idea regarding the necessary qualifications and whether a life settlement is ideal for you in the first place.
Also Read: 8 Steps Towards Fit And Healthy Life
Consult Abacus Life Settlements to Get the Maximum Value from Your Insurance Policy
Life insurance is an investment to secure your dependents in case of your death. However, it is also something you can sell to sort out your current needs. If you are facing any of these five situations, selling your life insurance might be a good decision. All in all, consult experts at Abacus Life for advice and assistance.