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Did you know that there is a vibrant secondary market in which you may be able to sell your existing life insurance policy? Your first thought may be, “Why would I do that?” Believe it or not, there are many people who, for a variety of reasons, explore this transaction known as a Life Settlement.
Who Does This?A person who no longer has a need for the life insurance he or she originally purchased would be a good fit for a life settlement. Let’s say your kids are grown, you are widowed, or your family is no longer a consideration in your life insurance policy, you can now sell that policy and enjoy the benefits now.
How Does It Work?There are people out there who may be willing to buy your life insurance policy as an investment alternative.
That anticipation is that the buyer of your policy will collect the full death benefit. There is the chance that you’ll live past your life expectancy, thereby reducing the returns for the investor and there is also a chance you will pass away shortly after your policy is bought, creating a larger return potential for the buyer.
Life Settlement offers can also include a combination of cash now and a retained death benefit. There are also important tax considerations to take into account.