How Are Life Settlements Paid?

May 21, 2024 | By Adam Lippman

How Are Life Settlements Paid?

Life Settlements are paid to policy owners by a third party who agreed to buy the life insurance policy. The payouts are typically cash lump sums paid after the Life Settlement process is completed.

Life Settlements Explained

Situations change ‚ÄĒ a policy owner may have taken life insurance to provide a payout when they pass away, and the dependents may have grown up and no longer need the death benefit. An insured may also no longer want to pay premiums, so a Life Settlement may be a lucrative option.¬†

A Life Settlement is the sale of an insured’s insurance policy for a cash payment. It allows the insured to maximize their life insurance policy and redirect funds to serve current financial needs.

Settlement Options for Life Insurance Policies

Insurance settlement options help the insured sell unneeded policies to a third party via a broker. Options include:

  • Traditional Life Settlement:¬†These settlements are the most typical Life Settlement options. The policy owner is over 65 and initiates¬†the Life Settlement¬†to get a cash payout or a portion of the cash and coverage with no more premiums.
  • Viatical Settlement:¬†A¬†Viatical Settlement is¬†for policy owners who are terminally ill. Though it is similar to a Life Settlement, the difference is that the payout percentage for a Viatical Settlement may be higher because of the reduced life expectancy of the insured.¬†
  • Retained Death Benefit:¬†A Retained Death Benefit is a settlement option wherein the policy owner enters an agreement with a licensed insurance carrier, enabling the insured to maintain life insurance coverage without the burden of paying future premiums. The insured gets free coverage at the cost of a reduced death benefit compared to what was termed in the original policy.¬†

Discover Viable Settlement Options for Life Insurance Policies

If you are over 65 and have a life insurance policy valued over $100,000, you may be eligible for Life Settlement. You can benefit from the liquidity of receiving a cash payout when a third party buys your insurance policy. 

Explore the settlement options available to you and discover how much your policy is worth by connecting with the experts at the Settlement Benefits Association.

We are a reputable Life Settlement Brokerage that represents policy owners. Our independent status allows us to secure the highest settlement for the insured. We will simplify the Life Settlement process for you by leveraging our two-plus decades of experience and advanced tools. 

Settlement Benefits Association is  Life Insurance Settlement Association (LISA) approved and certified. Contact us online to learn about settlement payments and your Life Settlement eligibility. 

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