Selling On The Secondary Market For Life Settlements

By Author: Norris Rios
Total Articles: 572
Comment this article

Insuring your life is something most people approach as a matter of duty. No one actually wants to think they are going to die in the near future but, if you are going to do the job properly, you have to start with the assumption you could die at any time from next week onward. That way, you can work out how much money would be needed at each point in your life to fill in the likely loss of your income. With the math all done, people then put the policy away somewhere safe and never feel they have to think about it again. Years pass. The possible deaths never happen. You remain disgustingly healthy and active. Finally, you decide you've had enough and shuffle off the mortal coil. Those who remain pick up a good sum of benefits and all remember you with kind thoughts.

This is the good life. Unfortunately, as the current recession demonstrates all too clearly, not everything follows a smooth and predictable path. The unexpected can put a very sudden strain on your financial planning. It can be loss of a job in later life or you find retirement more expensive than you had expected. It could be a medical problem that brings ...
... a big bill when you were least expecting it. No matter what the reason, there's often little choice once you've maxed out the credit cards. You look around. With luck on your side, there may be the family home, now free of a mortgage. But do you really want to borrow using it as collateral or, worse, think about selling it? What about stocks? Well if the recession is still hanging over us, you may be looking at losses on that front as well. At this point you come to the insurance policy.

If you talk to the life company, it's likely to talk about the cash surrender value (CSV), assuming you have a policy with an investment component. This cancels the policy and allows you to claw back some of the payments you've made over the years. Needless to say, the CSV offers very poor value. The second option depends on the terms of the policy you bought all those years ago. Some policies allow you to withdraw a part of the investment element. Others allow you to use the value of the policy as collateral for a loan. Beware a loan. The interest is added to the policy and, if you don't repay the money borrowed, you can lose a lot of the remaining value of the policy to unpaid interest. If you must borrow money from the insurer, start paying it back as quickly as possible.

The best strategy is to sell the policy on the secondary market for life settlements. This has been the preferred option in Europe for decades and is now developing in America. If your life insurance policy is worth at least $250,000, there are many willing buyers who pay far more than the CSV. Ignore all the propaganda put out by the insurance industry. It's just sore it loses a big opportunity for profit. This secondary market is not a scam. You can get a good price for your life insurance policy.