Life settlements are very interesting and in fact many individuals are unaware of their existence. Life settlements are when a person chooses to sell their life insurance policy for a certain price to someone who is looking for an investment.

A life settlement is the sale of an existing life insurance policy to a life settlement provider. Life settlements are an option for policyholders who determine that their current policy is underperforming or is no longer needed due to changes in the owner’s financial or other circumstances. A life settlement is NOT the same as a viatical settlement. In a viatical settlement the insured is ill and has a terminal diagnosis.

A life settlement is an alternative option to surrendering a policy or letting it lapse by not paying premiums. Often a person no longer wants to maintain life insurance, even though it has monetary value.

Life settlements are similar to viatical settlements in that a third party purchases a life insurance policy from the policyowner at a discount and holds it to maturity. However, the target market, distribution channel and motivation to sell the policy are completely different. Life settlements are a ‘win-win’ transaction for both the insured seller and the purchaser. Owning a life settlement is an easy process for the purchaser and simply becomes a short term buy and hold to maturity type of vehicle similar to a Certificate of Deposit (CD).

A life settlement is not a viatical. Viaticals are purchases of policies of the terminally ill with a life expectancy of two years or less.

A life settlement is a transaction in which an insured person sells a life insurance policy to a third party, receiving a fraction of the death benefit of the policy. The buyer pays the premiums on the policy and collects the benefit when the person dies.

A Life Settlement is the sale of a life insurance policy for an amount greater than the cash surrender value, but less than the face value. A Life Settlement lets you convert a non-performing, illiquid asset into cash or another financial product that is more suited for your present stage of life.

Life Settlements are increasingly being used by Senior Citizens to fund retirement, pay for long-term care, or just pay rising living expenses.