A life settlement is the sale of a life insurance policy to any other person or the third party. It is also known to many as ‘life settlement’ or ‘lifetime settlement’. Life insurance settlements offer the policyholder an amount that can be more than the actual cash surrender value of the policy. The company also gets an opportunity to earn profits too. The third party or the purchaser of the life insurance policy, will pay for the premiums and other expenses. The purchaser will also get death benefits in return when they take over the policy. Older policyholders, as well as younger policyholders, can also sell life insurance settlements.
Why Sell in the First Place?
One opts for a life settlement when there is a need for cash. This can be obtained through the sale of the insurance policy. One can even sell it when the life insurance is not necessary anymore, and there is no need to hold the policy when one can get more money for selling it. In fact, as one can get more money for selling it than retaining it, many prefer to sell it for its benefits. Many policy holders cannot hold the payments of the premiums and other such rules and are unable to bear the financial burden of the premium payments. The purchaser is the whole and sole beneficiary of the existing policy and will henceforth begin to pay the premiums accordingly.
A Legal Transaction
Selling your life insurance policy for cash is a legal transaction, and you can do it anywhere and sell it to anyone. There are three parties involved here, and they are the seller, buyer and the insurance company. Everyone knows about the deal and the other details that go into selling the policy. This makes the deal very transparent and legal so there is no illegal activity that can take place during the transaction. It is an easy and hassle free process if the insurance company is well known, and the selling party has all the right paperwork and complete payment of premiums.