How Life Settlements Can Provide a Second Chance For Retirees

A life settlement resembles a specialized type of transaction. It involves transferring an existing life insurance policy between an individual, the policy owner, and a third party, the life settlement provider.

The policy owner agrees to “sell” their life insurance policy to the provider, like Abacus Life, for a one-time, lump sum payment. The transaction’s value often exceeds the policy’s original cash surrender value, usually less than the policy’s real net death benefit.

This gives the policy owner an exciting opportunity to take funds from an existing asset and use them during the lifespan of the original policy owner for any purpose they decide.

Why Choose Life Settlements?

Life settlements have recently attracted considerable attention, particularly from private funds. This strategy allows policy owners, especially seniors who no longer need, want, or can afford their policy, to tap into the value of a policy they might not have known existed.

How Can Life Settlements Benefit Retirees?

1: Financial Boost

The primary advantage of life settlements for retirees is the potential financial boost. The lump-sum payment received is usually higher than the policy’s cash surrender value. This additional income can be used to improve the retiree’s standard of living, pay off debts, cover medical expenses, or invest.

2: Flexibility and Control

Life settlements also provide increased flexibility and control over one’s financial future. By liquidating an asset, the life insurance policy, that may no longer serve its original purpose, retirees can reallocate funds where they are most needed, providing financial security.

3: Assisting in Estate Planning

Life settlements can also assist in estate planning. The proceeds from a life settlement can be used to plan for a family’s future and ensure that loved ones are cared for.

The Process of Life Settlement

The process begins when the policy owner decides to sell their life insurance policy. This is usually facilitated through a life settlement provider, like Abacus Life, who will evaluate the policy and the insured’s health status. Once an offer is made and accepted, the policy owner receives a lump sum cash payment. The life settlement provider then becomes the new owner and beneficiary of the policy.

Life Settlements Vs. Viatical Settlements

While similar, life settlements and viatical settlements cater to different situations. A viatical settlement occurs when a person with a terminal or chronic illness sells their life insurance policy. The critical difference lies in the health status of the insured. Viatical settlements are specifically for those with a life expectancy of less than two years.