What is a Life Settlement?
A life settlement is a financial transaction in which an individual sells their life insurance policy to a financial institution for a lump sum payment. The buyer of the policy becomes the new owner and beneficiary of the policy and assumes responsibility for paying the future premiums. In return, the seller receives a cash payment that is higher than the policy’s cash surrender value but lower than its death benefit. Life settlements are typically used by individuals who no longer need or can no longer afford their life insurance policy, or who prefer to receive a lump sum payment rather than continuing to pay premiums.
Many times, seniors inquire about life settlements when seeking financial security in times of hardship. Whether the policy owner has fallen behind in payments, or experienced a lifestyle change affecting their personal finances, a life settlement can offer them a chance to financially recover. In some cases, seniors may resort to getting a life settlement because their spouse has passed away, and their children or heirs are self-sufficient, so they choose to utilize the cash now. Investors sometimes choose the settlement route because of the added advantages that come along with the process. Life settlements offer attractive rates of return, safety and stability, and is considered to be a “win-win” investment.
So, what can a life settlement fund?
Life settlement funds can be used for a variety of purposes, depending on your specific financial needs and goals. Here are some common ways that people use the funds from a life settlement:
- Paying off debts: You may choose to use the funds to pay off high-interest debts, such as credit card balances, car loans, or personal loans.
- Covering healthcare expenses: You may use the funds to cover healthcare expenses, including medical bills, long-term care costs, or assisted living fees.
- Investing: You may choose to invest the funds in a new venture, a diversified portfolio of stocks and bonds, or other investment opportunities.
- Funding education: You may use the funds to pay for college tuition or other educational expenses for yourself or a loved one.
- Enhancing retirement income: You may use the funds to supplement your retirement income, allowing you to enjoy a more comfortable retirement.
- Making a large purchase: You may use the funds to purchase a new home, a car, or other big-ticket items.
It can be beneficial to work with a financial advisor to determine the best use of the funds from your life settlement, based on your individual circumstances and financial goals. Above all, the funds obtained from a life settlement transaction can be spent entirely at your discretion—there are never any strings attached.
If you or someone you know could benefit from the life settlement financial option, never hesitate to reach out to Abacus Life, the leading buyer in amount paid out to policy sellers, at info@abacuslife.com or 800-561-4148.
