Senior Settlements
While life settlements were introduced as a major asset for those who required financial relief by surrendering their policies, a specialty was introduced in the way of senior settlements for the seniors who today have many options about how they want to spend their retirement life. This has helped them to meet all their requirements right from paying the medical bills to even going out on their dream vacation as well!
What are senior settlements?
A senior settlement is the sale of an insurance policy by a senior to an investor for a percentage of the insurance amount. Where earlier one had to wait for the policy to lapse or accept a lower cash surrender value on selling off such insurance policy before its maturity date, the senior settlement allows you to sell off your policy at a value much higher than such surrender value. Following are the clauses you need to satisfy to qualify for senior settlements:
Ø The insured has a limited life expectancy of less than 15 years.
Ø The policy holder must be at least 65 years old.
Ø There are no existing liens on such life insurance policy.
Ø The life insurance policy is worth at least $100,000 or more.
Ø The coverage has been in force for at least 2 years.
Under this scheme, a senior can sell his or her policy to a third party, who then becomes liable for all future payments and premiums on that policy. The senior citizen gets a lump sum in return for such sale of insurance policy. This is a very important tool to help them free up cash investments in such long term life insurance policies.
How are they different from Life Settlements?
Though life settlements are as good as the senior settlements, such an additional option provides the seniors with an option to settle their policies at a much higher value once they are over 65 years old. The difference between such settlements is the life expectancy involved which is limited in case of a senior settlement.
Origin of concept:
With inflation on the rise, the seniors started to realize that they might not have saved enough for their post-retirement days and this is how the senior settlement process came into being. It helped them to maintain their same style of living by using such provisions for the rest of their journey ahead.
Though seniors have other options like going for a reverse mortgage, using their own savings or even availing the aid of their relatives and friends, still senior settlement provides them an excellent way to gain access to their own funds during their lifetime.