By: Peter Emerson
Life settlement funding, also known as senior settlement or life time settlement, is a scheme that allows qualified life insurance policy owners to liquidate a life insurance policy for an amount much higher than the cash surrender value. If a senior person, over 65 years old, owns a policy that is no longer needed or affordable or there is no option but to lapse, then the life settlement funding companies help him in selling his Life Insurance Policy at a much higher price than what he would have received by surrendering the policy. Life settlement funding companies have created a secondary market for life insurance policies.
The entity buying the policy becomes the new beneficiary of the policy and is responsible for all premium payments from the time of the purchase. Life settlement funding provides many additional benefits to the policy owners like relief of monthly premium expenses, additional funds to supplement retirement income, and funds to seek treatments not covered by health insurance. The seller can decide whether or not to work with a broker.
Life settlement funding has not yet become a mainstream financial product but it has created competition for the life insurance companies, by giving the consumers a choice to sell their policies in an open market for a higher price, above the cash surrender value offered by insurance companies. The top providers in the life settlement funding companies hold the seller’s policy as a confidential portfolio asset, and do not make it available to outside investors. Although most states have laws and regulations in place covering viatical settlements, less than a half has laws regarding life settlement funding or senior settlement funding.
