News Flash! Life insurance is a traditional asset that can now be purchased or sold like any other personal property, much like a house, car, antiques, old painting or stocks and bonds. Therefore, insurance policies can be sold like any of your other personal property item. However, most people do not know they can sell their policies.



Sometimes called senior life settlement, life insurance settlement or senior settlement – its all the same - the sale of an existing life insurance policy by a senior (a person 65+ years old) on the secondary market to an investor for a percentage of the insurance amount.

A huge insurance industry secret: Over 90% of life insurance policies never make a payout. This is because most people let their policies expire (lapse) or turn them back in to the life insurance company for a small cash value.

Few senior policy owners realize that their policy might bring 5% to 25% of the death benefit through life insurance settlements or senior life settlements. On average, life settlements are at least three times larger than policy cash surrender values. In almost all cases, a senior life settlement will be less than the policy's death benefit, but much more than its cash surrender value.

Most policies are lapsed because of high cost or other financial strains. Sometimes a policy holder may no longer need to have a particular life insurance policy. So, there is little point in keeping it and continuing to pay the premiums. Senior life settlements allow policy holders to receive a large lump sum of cash in exchange for transferring the rights of ownership of the policy to an investor.

Senior life settlement example: The senior was a 73-year-old male with a $1,500,000 Variable Universal Life policy $2,600.15 cash surrender value. The senior no longer needed the policy. He could have surrendered it, but decided to get a life settlement appraisal. The value was assessed at $345,000.00. Had he surrendered the policy, he would have lost $ 342,399.85. This is the value of senior life settlement.

Senior life settlement works like this: a financing firm will pay the policy holder an agreed-upon amount for the life insurance policy. The policy holder transfers all rights and obligations to the investor company, which then pays the insurance premiums from that point forward. When the old policy holder dies, the investor company will act as beneficiary and collect the policy's face value amount.

The number of individuals in the United States over age sixty five (65) will grow to a projected 69 million by 2030 (Source: US Bureau of Census). As a result, some have predicted the senior life settlement market to “grow…to $160 billion over the next several years.” (Source: Bernstein Investment Research of New York City, 2006). Of the $1.4 trillion in overall cash value life insurance in 2002, it is estimated that senior citizens held policies worth $492 billion.

Major reasons why seniors seek life settlements: they no longer need or want the coverage; the policy is too expensive; policy is about to lapse; beneficiary is now deceased; desire to distribute the funds while living; make other investments; start a new business; divorce settlement; donate to charity; need extra retirement funds; assist family members, etc.

Senior life settlement funds can be used for any purpose including everything from paying medical bills to going on a dream vacation. These transactions provide seniors opportunities to immediately benefit from the market value of an existing life insurance policy and reuse those funds for whatever purpose one chooses.

Senior life settlement qualifications: 65 years old minimum age; $250,000 minimum policy face value; policy in force for at least two years contestability period); and premium percentage 55 or less.

Policy type must be whole life, convertible term, universal life, variable life, joint policies, key man policies and even some group life policies (with no existing liens).

How much a senior will receive depends upon: the insured's health condition (life expectancy); annual cost of maintaining premium payments; policy face amount; and the funding company's discount rate.

Senior settlements are sometimes mistaken for viatical settlements. Though loosely similar in some respects, they are decidedly different in others. Viatical is a settlement designed for any aged individual with a terminal or chronic illness. Senior life settlements, on the other hand, are designed only for individuals 65 years and older; life expectancy may extend for as many as 15-19 years.

You now have the knowledge to help those seniors around you. Spread the word. Inform all seniors, elder caretakers, endowments, non-profit organizations, estate attorneys, insurance agents, financial planners, trustees and everyone you know about the power and possibility of senior life settlements.