Chances are you’ll end up lapsing. The number and amount of lapsed life insurance policies by U.S. seniors over age 65 is astounding: more than 250,000 policies with a combined face value of more than $57 billion are lapsed and surrendered back to life carriers each year.
It’s unfortunate that many seniors are not aware that they can get relief from increasing life insurance premiums by using their life insurance policy as a reliable way to fund retirement. A recent survey found that 86.1 percent of seniors are not aware of the option to sell their life insurance policies. Making matters worse, their advisors aren’t informing of the option either. This type of transaction is called a life settlement.
A life settlement is the sale of a life insurance policy to a third party for more than the policy’s cash surrender value. A policy owner receives a cash payment, while the purchaser of the policy assumes all future premium payments and receives the death benefit upon the death of the insured.
Until recently, a life insurance policy was only considered to be a valuable asset after a senior passed away; therefore, simply for the financial gain of the named beneficiaries. Now, as an important asset included in the entirety of a senior’s portfolio, that same life insurance policy can be a potentially valuable resource to provide needed cash resources within the overall financial plan right now.
A good starting point for you is to talk to your trusted financial advisors. This may be a financial planner, an investment advisor, an attorney, a bank trust officer and/or perhaps your accountant. These are the folks who know your personal circumstances, your financial objectives and perhaps your family dynamics. They are uniquely qualified to guide your decision-making process when it comes to the evaluation of your assets, including your life insurance policy.
You may also want to check out a great book by called “The Hidden Value in your Life Insurance” by Darwin M. Bayston, a chartered financial analyst, and Daryn N. Teague, a public relations consultant who works with providers of legal and financial services. It’s easy-to-understand, unbiased, trusted information from an authoritative source.
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