When you no longer feel like you need your current life insurance policy or want to buy a better one, you go for a life settlement. You sell your policy to a third party, preferably a life settlement providing company and get instant cash in return. Some two decades back, no one would have imagined that life settlements would become as popular as they are today.
Life settlements were traditionally for AIDS patients, and today, just about anyone can get a life settlement given they meet the eligibility criteria for it. Many people still wonder how life settlements suddenly grew in popularity so much that people would rather go for a life settlement than surrendering their policy to the life insurance company where they bought the policy. Here’s a list of reasons why life settlement transaction is growing in popularity.
HIGHER PREMIUM RATES
When you initially buy a policy, the premium rates aren’t too high. They are decent enough for anyone who plans to have the policy to afford. However, as time passes by, the premium rates also start increasing. This makes people question if they actually need the policy so much that they have to pay costly premiums. Soon, premiums might become a new financial headache, where every year, you have to lose a good amount of money in the form of premium.
So, as soon as seniors reach the age of 65, when they are eligible to sell their policy for a life settlement, they sell it off so that they no longer have to pay for costly premiums. Once you sell your life insurance policy, the third party that buys the policy pays for premiums each year until they get the death benefit.
CHEAP SURENDER VALUE
One of the benefits that insurance companies give to their clients is the option of surrendering their policy back to the company and getting money in return. Prior to the popularity and introduction of life settlements, surrendering the life insurance policy was thought to be the best way of escaping costly premiums. However, the money you get upon surrendering the policy (surrender value) is pretty less.
This is when people started inkling towards making a life settlement transaction more than surrendering their policy for the surrender value. The amount of money you get when you sell your life insurance policy to a third party for a life settlement is a lot more than the surrender value for your policy. So, it naturally becomes a more popular option among seniors.
NO NEED FOR EXTRA COVERAGE
There are so many instances of people with a policy who don’t feel the need to have extra coverage as they age. It also makes sense for them to rather have some money in their account so that they can use the money for any urgent need, like medical expenses. This is especially applicable to people who don’t get a pension as they retire. So, when you have extra coverage, you would rather sell it off and get money for it that you can use whenever you want.
INCREASED DIVORCE RATES
Most people who buy a life insurance policy after marriage keep their spouse as the beneficiary. However, when you get divorced, you would no longer want to sustain your life insurance policy for the beneficiary. You would rather sell it off and get a life settlement so that you can use the money for yourself or buy a new policy with that money. With that being said, since the divorce rate is higher these days, there are instances where divorcees seek a life settlement transaction, which is also on the rise.
To put it in the simplest way, one of the basic reasons why life settlements are much popular is because people have become more aware of them. When people don’t need their policy anymore for whatever reason, they look for alternatives. And since people use the internet a lot, they are sure to find out about life settlements. People who are new to the concept take time and read about life settlements to educate themselves and consider this option as well.
These are some of the reasons why life settlements are growing in popularity. It’s obvious for people to look for an option when they don’t need their policy anymore. And life settlements have proven to be one of the best options. If you’re willing to sell your policy for a life settlement, you should do your research and get quotes from a few life settlement providers and settle down for the best price.