A life settlement is a financial transaction where you sell your life insurance policy to a third party for a cash payout. This amount is typically more than the surrender value of the policy but less than its death benefit. In a life settlement, the buyer assumes the responsibility for paying the premiums and becomes the beneficiary, collecting the full death benefit when the insured individual passes away. Life settlements provide an opportunity for policyholders to turn an unneeded or unaffordable policy into immediate financial resources, offering an alternative to surrendering the policy or letting it lapse.
Life settlements can provide significant financial benefits, particularly for seniors who no longer need their policies or are burdened by high premium payments. The cash received from a life settlement can be used for a variety of purposes, such as covering medical expenses, funding retirement, paying off debt, or even enjoying a well-deserved vacation. Instead of letting a policy lapse and losing its value, a life settlement allows you to unlock the equity in your insurance policy and use it in ways that benefit you and your family during your lifetime. It's a powerful financial tool that transforms a policy into an asset you can use immediately.