Millions of Americans own life insurance policies, but far too many are abandoned before they will pay a death benefit.

Surrendering or lapsing a policy by stopping payments renders it worthless, even after paying premiums for years.

Fortunately, there is another option available to policy owners that will let them cash out the policy while they are still alive and use that money towards the costs of retirement, health or long-term care needs.

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Financial Security for Aging, Part 1, a multi-part series exclusive for Newsmax Money by Retirement Genius
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Life insurance policies are one of the most valuable assets a person can own, yet some policy holders may find that they no longer need a policy but have a need for that money before they die.

Today, life insurance policy owners have the legal right to sell off all or a portion of an unneeded or unwanted policy through a life settlement.

Most people don’t realize that a life insurance policy is personal property just like their home and that it has fair-market value while they are alive, and too often abandon the policy as seniors.

Hundreds of billions worth of life insurance is abandoned every year before paying out a death benefit. But awareness about this financial option is growing.

TV commercials similar to reverse mortgages are running constantly on TV, radio, and online. Today there are billions worth of Life Settlements done by policy owners every year.

How a Life Settlement Works

A life settlement is the sale of a life insurance policy by the policy holder while they are still alive for a percentage of the in-force death benefit.

Most often, a life settlement is for seniors over the age of 65 with a life insurance policy above $100,000 of face value.

The value of a life settlement is based on “reverse underwriting,” so the older and sicker a person is, the more they will get from their policy’s death benefit.

The typical age range for a life settlement is 75-92, but younger or older applicants can qualify based on the severity of their health-related impairments.

People suffering declining health, chronic conditions needing long-term care, and possibly terminal diagnosis are appropriate candidates for a life settlement.

Any type of life insurance policy could potentially qualify for a life settlement. Term Life, Universal Life, and Whole Life policies with $100,000 or more of death benefit are all eligible.

The process of a life settlement takes about 60-90 days, and thousands of transactions are completed every year.

Policy owners tend to receive a lump-sum payment between 10%-50% (industry average 22.5%) of the face value, and there are no fees or out of pocket costs to apply or transact a life settlement.

If a person is going to abandon a life insurance policy, it would make sense to get a no-cost, no-obligation policy review to see if they would qualify for a life settlement and how much money they could receive instead.

Five Things to Know About a Life Settlement

1. The Older or Sicker You Are, the More You Get

For seniors, the value of a life settlement increases as they age or if they experience health issues. This is because life settlements are primarily based on the life expectancy of the insured. The older or more impaired a person is, the higher the potential payout for their policy.

2. Life Settlements Can be Used to Pay Long-Term Care

Many people will access a life settlement at the time they need expensive healthcare and long-term care services. The funds accessed through a life settlement can pay for any form of care such as home care, assisted living, and memory care.

3. Life Settlements Are a Legal Right

Every policyholder has the legal right to sell their life insurance policy through a life settlement. This means seniors can access a cash payout instead of abandoning or surrendering their policy to the insurer.

4. No Costs or Fees, No Payback

Seniors often hesitate to explore Life Settlements because they fear hidden fees or long-term commitments. There are no costs or fees involved in the process, and there’s nothing to pay back. It’s a straightforward alternative to get the value out of a life insurance policy as a cash payment.

5. A Quick, Simple Process

The process of completing a life settlement is efficient, typically taking 90 days or less to complete. Once the settlement is finalized, the policyholder is free from any future premium payments.

Do You Qualify for a Life Settlement?

Life Settlements are one of the few financial tools designed to benefit seniors with higher cash value as they age and face growing health challenges.

Here are the typical qualifications to meet:

• Type of Policy: Universal, Term, and Whole Life policies are all eligible.
• Age: Typically, seniors aged 75-92 qualify, with a minimum of 65 years old.
• Health: Those with chronic, impaired, or even terminal health conditions are eligible.
• Policy Value: A minimum death benefit of $100,000 is required for any policy to be considered.

Life Insurance: A Valuable Resource to Fund Retirement and Long-Term Care

Life insurance is first seen as a tool for a death benefit, but it can provide much-needed financial relief for seniors during their retirement years and when facing long-term care costs.

Too many seniors unknowingly abandon policies after years of premium payments, missing out on potential value that could address their financial needs today.

Life Settlements are specifically designed for seniors, offering maximum value for life insurance policies to address the unique financial and healthcare needs associated with aging.

Just as you wouldn’t abandon a home after years of mortgage payments, seniors shouldn’t let a life insurance policy lapse without exploring its life settlement value first.

Disclaimer: Nothing herein should be construed as a life settlement offer or tax, legal, or accounting advice. This article is for informational purposes only, and is not intended to provide, and should not be relied on for tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in any transaction. Any specific life settlement offer would be presented by a licensed life settlement provider.

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Chris Orestis, CSA President of Retirement Genius, is a nationally recognized expert in retirement, finance, long-term care, and a pioneer in LTC-Life Settlements. A former political operative, D.C. lobbyist and senior issues advocate with 25+ years of industry experience, he is one of the most frequently quoted aging and retirement experts in the media, a published author, national speaker and TV, radio, podcast personality. Chris@retirementgenius.com / www.RetirementGenius.com