Life settlements for Retirement

by Karl Fitzner

Investigate life settlements and viaticals before you drop or surrender your life insurance for its cash value. Not doing so could mean the loss of thousands of dollars. the nest egg of life insurance

Approaching retirement we tend to sort through our lives. Planning for a lifestyle change, we rid ourselves of things we no longer need, to make room for the dreams of the years to come. A hard look is given to expenses.

One of those expenses may be a life insurance policy used to protect your family in case something happened. To make sure the kids had the education needed for a good start in life. Situations now in the past.

Most folks at retirement let their policies drop or surrender them to the insurance company for the small cash value that has built up through the years. A recent development allows you another, more profitable, option. Life settlements.

Life settlements, sometimes called senior settlements, are based on the death benefit or face value of the policy. The pay out is usually many times more than the cash surrender value of the policy. They are available to anyone age 65 and older with a life insurance policy of $100,000 or greater.

Though oftentimes they are all referred to as viaticals, the more restrictive viatical settlement is reserved for anyone of any age who is terminally ill with a life expectancy of less than two years. Either type of settlement involves trading your policy to an investor for an amount of cash based on a percentage of the death benefit.

A few facts... life settlement process graphic
  • Most policies are dropped because the coverage is no longer needed or the premiums become too much to pay.
  • The funds can be used in any way. Pay off bills. Travel. Medical expenses. Charitable contributions. Anything.
  • The policy must be at least two years old.
  • Policies with a face value of a $100,000 or more are usually what the investors are looking for.
  • Offers may differ by $1000's. Investigate several options.
  • When you take a life settlement, you no longer have to pay premiums.
  • The process is usually accomplished through an agent or broker.
  • Investors range from individuals to large companies.
  • Just about any type of life insurance policy can be used, including term and group life.
  • You will probably have to pay taxes on the settlement.
  • Life settlements and viaticals may not be for everyone. However, if you are thinking about dropping your life insurance or surrendering it for cash value then they merit more investigation.
© 2007 Karl Fitzner Used by permission