What is a Life Settlement?
When a senior sells their life insurance policy to an investor or third party, this transaction is called a life settlement
Why would someone sell their Life Insurance Policy?
- The premium costs increase dramatically
- They can sell their policy for more than the cash value
- Their family situation has changed, and they no longer need it
- They need the cash
EXAMPLE: Jane is 85 years old and owns a $1 million life insurance policy. She has developed chronic health issues and now needs nursing care. Jane decided to sell her policy instead of continuing to pay the insurance premium in order for her to use the cash to pay for her long-term care costs.
What is a Life Settlement Pool?
For decades, only ultra-wealthy and institutional investors like Warren Buffett, big banks and investment companies could afford to buy life settlements. In 2003, the introduction of Senate Bill 1837 in the state of California enabled the everyday qualified investor to purchase life settlements. Rather than one wealthy investor purchasing an entire policy, now the everyday qualified investor can own smaller portions of several policies.
Benefits Include:
- Instant diversification
- Potential double-digit returns
- No stock market correlation