This month, Easin’ Along is focused on our approach to improving our health and well being as we pursue an active lifestyle in our retirement. As a supplement to that effort, I thought it might be an opportune time to include a few articles related to the pursuit of better financial health as well. I offer these articles not as recommendations, but as options to consider.
This post was written by guest blogger Lingke Wang. Lingke is the Co-Founder of Ovid Corp., a life settlement exchange where consumers can sell their life insurance policies through an auction to institutional investors. He believes in helping consumers to understand all of their financial options so they can make the most out of their hard-earned dollars. You can learn more about Ovid at www.ovidlife.com.
Helping Seniors Fund Retirement with Life Settlements
Many people with permanent (whole or universal) life insurance policies believe they must choose between surrendering or lapsing a policy. The policyholder gets to keep any accrued cash value on a permanent life insurance policy, but they may not realize that there is a third and possibly much more lucrative option.
Reputable companies offer seniors who don’t need their permanent life insurance policies a chance to do the things they’ve always dreamed of
For many people, accessing the cash value of a life insurance policy makes perfect sense after they’ve raised their family and no longer need to replace future income upon death.
Permanent life insurance policy holders are allowed to surrender their policy any time, but people who have this type of insurance are often unaware that they may get more money from a life settlement.
Is it safe to seek a life settlement?
Selling a life insurance policy to an investor for a percentage of its value is an option that many seniors choose. The industry is now highly regulated and much safer for consumers than it was decades ago.
Policy holders are entitled to receive comprehensive consumer disclosures in most states. This includes the risks related to government assistance eligibility and taxation. Most states require life settlement companies to obey federal and state privacy laws. Life settlement firms also must submit their anti-fraud plans to the states where they operate.
Life settlement transactions are now some of the most regulated and transparent in the entire insurance industry. In fact, according to LISA, 42 states are now protected by life settlement regulations. This includes covers 90% of the US population.
As life settlements become more popular, individual states are beginning to recognize the need to protect their residents. Their efforts to make life settlements a safe option have effectively overhauled the industry. Since January of 2012, there have been only two nationally reported complaints that involved settlements.
Surprisingly, the newest legislation enacted aims to protect people from their insurance companies – when they have to choose whether or not to lapse or surrender a permanent life insurance policy.
Life settlements decrease profits for insurance companies. Because choosing a life settlement can be much more financially rewarding to policy holders than simply accessing the cash value of the policy from the insurance company, some states have recently created laws that require insurance companies to inform their customers that life settlement is an option to consider.
How can a life settlement help?
Many people in retirement or on the cusp of a life changing event wish they had more money; a bigger nest egg, a larger traveling fund, extra money for health care, or a more substantial financial cushion as a fall-back for starting a new business venture. While it’s true that the longer a policy has been in force and active, the larger the pay out at surrender, it’s also true that in many cases the policy holder will be much better off financially if they seek a life settlement with a reputable company.
Most policy holders haven’t thought about their life insurance as anything other than a means by which to provide for their loved ones in the future. New laws recognize that permanent life insurance is so much more versatile with life settlements as an option.
Easin’ Along is grateful to Ovid Corporation for providing this information to our readers.