A Life Settlement Is...

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.

Life settlements are not affected by fluctuations in the stock and bond markets, interest rates and business cycles but still provide the opportunity for exceptional returns on investment. Bloomberg states, in a black sheet analysis published March 31, 2006, "Life Settlements are the only asset that can be truly said to provide absolute returns". Life settlements are becoming increasing popular as an exit strategy for seniors looking to shift or lapse their coverage.

A life settlement is when a person insured by a life insurance policy sells his policy to a third party, often an investment company. The investment company pays a percentage of the policy's value in a lump sum cash transaction.

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

Article Source: http://www.hostcontent.net

Ben is a noted author and advocate for Senior Citizens. He specializes in writing about the subject of Life Settlements and in how to obtain cash for your life insurance

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