What is a Life Settlement?

If you are experiencing financial problems, your viatical insurance premium can be an easy expense to eliminate. If you have life insurance and need to get rid of the policy, ask your insurance company about a life settlement. The life settlement simply involves the policyholder selling his or her life insurance policy to a settlement company, which may or may not be the issuing insurance provider. Usually, you will earn more by selling your policy to a third-party settlement provider than to the insurance company that issued it initially. This fairly recent type of transaction can lift the monetary burden of making monthly payments for life insurance.

Life settlements are most commonly the result of the policyholder's financial difficulties, but can stem from a variety of other situations. If, for example, a policy has only one beneficiary who passes away prior to the policyholder, there is no reason for the life insurance to remain active. The policyholder may also have gotten a new job that provides better life insurance or may need the money for current medical bills. Additionally, the policyholder may have received a better offer for life insurance through an employer or may need funds for present medical care.

There is also the chance that the policyholder's estate lawyer recommended getting rid of the policy for one reason or another. It may have been decided that the money should be invested elsewhere or used to purchase survivorship insurance. Some families also prefer charitable donations or trusts in order to allocate a family member's assets after his or her death.

Bankruptcy of a self-owned business is yet another reason that a life insurance policy may be rendered useless to an individual. If the policy was purchased under the company name, it no longer serves a purpose. The life insurance money can be utilized revamping your financial life after the bankruptcy has been finalized. Life settlements can be the product of any number of circumstances in a person's private life.

Typically, life insurance settlements transaction allows an individual to continue to provide a certain level of living for his or her family when unforeseen events occur. People who opt for a life settlement are often hoping to shield their families from the fallout of a financial disaster. Keeping their households as stable as possible is generally important to these people.

Life settlements are not the best option in every set of circumstances. This option can, though, be a vital tool for some families to survive a difficult financial struggle. You should not make the decision to engage in a life settlement transaction alone. You should consult with your family lawyer or a trusted financial adviser before you make a final choice.