When you love someone, you want to see them happy even if you are not around. Now there are a few reasons to consider buying life insurance but by far the most common motive for doing so is to see that the ones you love are taken care of financially once we pass. At the time of our passing, death benefits are paid to our beneficiaries. But, it is a also very true that many of purchase life insurance early on in our lives and usually after bringing children into the world. As we grow older and we create a more solid financial footing, the actual need for a life insurance settlement is reduced. After all, the kids are all grown up and we have grown wiser and have generally built a retirement portfolio that should leave our loved ones on firm footing after we pass.
Since the need for life insurance settlements decreases as we age, the temptation to cancel that policy grows. Now should we cancel, the company will pay you what is known as a “surrender value” in return for all those years we paid into the life insurance policy but never collected. But this surrender value is nowhere near the actual value of your policy after years, oftentimes decades, of paying into policy. This is why you should not consider the surrender value as your best option when canceling your life insurance policy. In truth, life settlement(also known as a senior settlement) is many times the best option for anyone cashing in their life insurance policy.
Now you may be scratching your head and wonder just what exactly these life settlements are and how they are the better way to go. Senior settlements are the result of you selling your life insurance policy to another party which may be a bank or some kind of financial institution that deals in such transactions. In return for the death benefits paid out in a life insurance settlement, a company entering into a life settlement will pay you a percentage of those total benefits when you sell your policy to them. Although they may only pay you perhaps 50% of the total amount of those death benefits, this is still a larger figure than what you would receive from the life insurance company in any surrender value transaction. How and why do they do these life settlement companies do this?
Although the surrender value of a life insurance policy usually includes all the money you paid in premiums over the years, the fact remains that it does not usually include the interest made off of those premiums over the years. Businesses that offer you the senior life settlement option are trying to make money from those death benefits but they know that they have to offer you more than the surrender value that the life insurance company is offering or else you have no incentive to do business with them. This is why they are willing to give you more of the real value of your life insurance policy than the insurance company. And, since there are numerous companies dealing in life settlements to choose from, you can shop around and find the best deal whereas the life insurance company will only give you the surrender value of the policy and no more.
So basically, an owner of a life insurance policy has a valuable commodity. The life insurance company will not make as much money if it has to pay the death benefits on a life insurance settlement so they are happy to see you cancel the policy and refund your premiums because they have made money off of your money for years. A life settlement company wants you policy because they see the potential for profit but are more motivated to give you top dollar for your policy than the insurance company. Clearly, the chances are pretty good that seeking a senior settlement is often going to be more profitable for you than any surrender value offered by the life insurance company. So, if you are considering terminating your life insurance, realize the value of that policy and check into senior settlements because you might be very amazed at the just how valuable your policy truly is and make more money in the process.
Learn more about Life Settlements at Insurance Settlement Review
Jim Prescott, CPA business consultant for over 30 years specializing in small and medium size businesses that range from closely held to publicly traded companies. Jim is a Partner in CPA firm Prescott Chatellier Fontaine & Wilkinson, LLP that offers audit, accounting, investment advice, tax planning services, estate plans, pension plans consulting and insurance advice. In addition to the CPA firm's web site Prescott Chatellier Fontaine & Wilkinson, LLP you can find more information and Articles on Life Settlements at Insurance Settlement Review.com