A Few Elucidations on Senior Life Settlements

Life is full of surprises. That's the case when you're young, and that will be the case when you're old. It seems you just can't get away from the unexpected. That bonanza of unpredictable twists and turns may lead you to think about making a senior  life settlement. It may be an option for you if you're seeking an immediate cash settlement. The life settlement process starts out with you selling your current life insurance policy before it has fully matured. In such circumstances, the sale will most likely be for an amount that's less than the policy's face amount, but more than the premiums' paid total, or cash surrender value.  

Senior  life settlements are not viatical settlements. The latter are usually carried out by seniors who are insured but have a very short life expectancy. These viatical settlements constitute a means for paying the markedly high insurance premiums that certain people must pay. However, senior life settlements are very similar to viatical ones in that, like viaticals, senior life settlements involve the selling a life insurance policy for an amount that's higher than the policy's cash value, but below its face value. There are many investors interested in buying a life insurance policy. In this exchange, as life  settlement brokers will explain it to you, the policy owner obtains a lump sum of cash and the investor, by taking on the responsibility of the policy's premium liability, becomes the policy's beneficiary.

Companies exist that are dedicated to seeking out life insurance policies that would serve better economic purposes as bought and sold financial assets. In this market, there is a lot of talk about "longevity risk," which is a key aspect of life settlements investor packages. The financial risk here is that a portfolio will see a life longer than the expected life. Financial writer Vishaal B. Bhuyan explains the longevity risk this way: "The chance that an insured lives longer than the estimate upon which the policy is valued by the life settlement company or by the investor."  Life  settlement companies can analyze the longevity risk individually or in blocks. Typically it is large organizations -- banks or hedge funds -- that buy life settlements. If you are considering this financial option, you will need to speak with an informed financial planner.

Sam Walters is a writer living in Los Angeles. Her writing appears in print and online.

About the Author

Richard A. Manfredi  has written about  www.advancedsettlements.com . Offers life insurance settlement, including senior life insurance settlement services.