WHAT IS A LIFE SETTLEMENT? – THE BASICS
The most valuable asset you never knew you had
In the past, life insurance policy owners had few options when a change of circumstances called for a reevaluation of their life insurance requirements. Continuing to pay costly premiums for an unneeded policy rarely made financial sense, in addition surrendering the policy for little to no monetary return was not a sound financial and estate planning decision. Individuals were stuck thinking of their insurance policy as an illiquid possession rather than an liquid asset.
Once policyholders secure coverage, they often routinely pay premiums and give little thought to the policy as a powerful source of future liquidity. The policy assumes an misallocated role in their financial portfolio, or is regarded as an expense that must be maintained. What is often not recognized is that as individuals near retirement, their policy can become an appreciating asset with intrinsic value. Via Life Settlements this asset value can be converted into immediate cash value much like other assets, providing timely liquidity.
A history of helping people to discover countless possibilities
The concept of Life Settlements is not new. In 1911, the Supreme Court ruled that life insurance policies are a type of property with value and therefore it was legal to transfer ownership. It has been more than one hundred years since the Supreme Court’s decision, during which the secondary life insurance market has continued to grow and evolve, punctuated by rapid growth in more recent years.
Why the increase in popularity? As the economic and cultural climate has evolved over the past century people have begun living longer and needing more out of their retirement. Seniors have been forced to seek options to these unforeseen changes. Some want to travel or enhance their lifestyle. Many have goals to help family members or charitable organizations that they are passionate about. In addition, there’s always the option of using their capitol to invest in higher-performing assets.
Further reading: Life Settlements