Is a Life Settlement The Best Option Available to You? |
Posted: January 17, 2021 |
Most people who want to take care of their spouse or family invest in a life insurance policy when they are young. These policies are a lot more affordable if you get them when you are in your 30s or 40s and in good physical condition. The issue with buying a policy so early in life is that your circumstances can easily change in a couple of decades. Unwanted Life Insurance Policies Statistics from insurance companies show how they make billions of dollars each year on insurance policies that lapse. No one claims those policies, which means the insurance company does not have to make any payout. A policy where no one claims the death benefit is common, as many people can end up with no dependents. If it appears you are in a similar situation, you do have some options. Life Settlements Perhaps you got your policy in your 30s and when you were married. Now you are divorced and you do not have children. Your parents are likely to pass away before you, which means there will be no one to claim your policy. Now you may be thinking of selling that policy through a life settlement, but the problem is that if you are relatively young, you will get a modest sum for your policy. Valuing Life Settlements Most life settlements are only substantial if the policyholder is very old or sick. That creates an incentive for a buyer to make an offer, and then cash in on the policy when the holder dies. If you are in your 50s and healthy, you could live for another 25 to 40 years. No one is going to make a competitive offer on your policy. Under such circumstances, it is better to hold onto your policy and cash in on it at a later date. Keep Your Policy Until Its Value Goes Up Even if you have no dependents, you should maintain your insurance policy. Think of it as a way to get some quick cash later in life when you need urgent help. Maybe in a few decades, you will need medical attention that requires a lot of money. You will be older and sicker by that time - and someone is likely to make a good offer for your policy. When it comes to life settlements, it is always better to hold on until someone makes you very competitive offer for your life insurance policy.
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