Life insurance is an excellent way of ensuring that your family is financially taken care of when you pass on. However, something else can come up and make you reconsider the priority and benefits of your coverage. 

Many people don’t realize that they can actually sell their life insurance policies and make good money before dying. This is usually done through what is known as Life Settlements.

How Does Life Settlement Work? 

A life settlement is when a permanent life insurance holder sells his or her policy to an investor. The policyholder receives a lumpsum payment from the investor, who will then take over the policy’s premiums. Before an offer is made, the investor usually considers a number of factors, including the policy’s terms and conditions and the holder’s health status and age. Sometimes the valuation is also done by an independent party.

The insured is usually paid an amount higher than the policy’s cash value but less than the death benefits. The investor will continue to pay the premiums until the policyholder dies, upon which they will receive the death benefit. Since the death benefit is higher than the cash value of the policy, the investors will always get some profit in the end.

Why Should You Consider A Life Settlement?

1. To Avoid Increasing Premiums

In term life insurance, the insured usually pays the same premium throughout the term. However, with other types of life insurance, the premiums increase at different rates depending on various factors. On average, the rates can increase by between 8% to 12% every year. Some insurers make even bigger increments which could leave you questioning whether the policy is as beneficial as it was when you first bought it.

Life settlement gives you a way out. While you will not get the death benefits of the insurance cover, you will still make some decent cash, plus the burden of high monthly expenses will be taken off your shoulders.

2. To Pay Off Debt

A life settlement provides a lump sum amount of cash that can be used to pay off mortgages, loans, and other debts. It is a great way of ensuring your loved ones are not left behind clearing your loans. This also increases the quality of your retirement years.

You should know that different investors provide different valuations for policies. Therefore, As the professionals behind QLife Settlements report, your ultimate goal should be to find one giving you the best settlement offer. This should help you settle your debts more comfortably.

3. To Replace Lost Income

A life settlement can come in handy when you lose your income for one reason or another. For instance, retired seniors usually struggle to meet daily expenses like housing and healthcare. A CNBC report shows that 50% of single seniors and 23% of senior couples cannot pay for basics. The report goes further to demonstrate that social security alone is nowhere near enough.

A life settlement is a viable option for such seniors. It can help them meet their needs and enjoy a comfortable retirement. 

4. To Avoid Losing Money In A Divorce

The settlement can be helpful in several ways when you are getting divorced. First, instead of letting the policy lapse and having one spouse collect all the benefits, you can use the settlement to divide the total value of the policy as an asset and share it between the two of you.

Secondly, the life insurance policy itself may become unnecessary once you get divorced if your partner was the beneficiary. The settlement helps you get your money back and invest it in something else.

5. To Avoid Losing Money When The Coverage Is Ending

So many seniors lose a lot of money when their term policies lapse, not knowing they can convert it to cash.

You can get a settlement for your term policy if you convert it to permanent life insurance before the conversion rider expires. So, if your term policy is about to lapse, consider looking for a valuable settlement and make money off it while you still can.

6. To Enhance Your Retirement Lifestyle

A settlement can give you the retirement lifestyle your savings can not afford. In addition to meeting basic needs like healthcare, a life settlement can provide a relatively big pool of funds that you can use to fulfill your dreams like traveling.

A life Settlement offers a unique opportunity to get some money out of an insurance policy that is no longer viable. However, take your time and make sure you shop around and find an investor with the best valuation for you.