Senior Life Settlement - What You Should Know

A senior life settlement, or life settlement in short, is very similar to what was known in the past as a Viatical life settlement.

The basic difference is that viatical life insurance settlements were intended for terminally ill life insurance holders with a very short life expectancy of up to 2 years, while a regular senior life settlement is targeted for the healthy life insurance holder with a life expectancy of more than 2 years, usually up to 10 years.

Both kinds of life settlements involve the selling of life insurance policies.

Definition of Life Settlement Policies

A life insurance settlements basically means that you are selling your life insurance policy in exchange of a cash lump sum.

By doing this you are earning an amount of ready cash while giving up the death benefit of your life policy.

This involves costs and benefits. The benefit is that you get your cash to use now.

The cost is that you will not get the death policy. Your policy is being transferred to another party.

Why Do A Life Settlement?

Why would you want to do a life insurance settlement and give up your policy?

The answer is because you need your cash now.

You may also become less interested in the death benefit, so that the value of getting your cash now exceeds your interest in the death benefit of your life insurance policy.

If you are about to give up your life insurance policy, surrender or let it lapse, because you don't want to pay the premiums any more or for whatever other reason, then you can just sell it and get a lump sum in exchange.

The party who buys is from you, or those who by it from them, will keep paying the premiums and in exchange profit from the death benefit.

How Much Can You Get For Selling A Life Insurance Polity

The value of life settlements goes up as you age. It depends, however, on various factors, including your health status and life expectancy.

The amount you'll get may vary from buyer to buyer. It can vary significantly, so definitely shop around for the best price.

Who Will Get My Life Insurance Policy?

When you do a senior life settlement, the life insurance polity is transferred to another party. This may be a life settlement company, or a broker. It may also be sold further by the life settlement provider.

By selling your life insurance policy and agreeing on a life settlement, your insurance policy still remains intact. However, it is being transferred to a different owner.

This is important to understand. It can have significant implications for you.

Costs Associated With A Senior Life Settlement

While a senior life insurance settlement carries the benefit of getting cash for your life insurance policy instead of getting the death benefits, it has as well several drawbacks.

  • You will not get the value of your death benefits, you will get less
  • You may have to reveal your personal information, including your health status to others
  • You will need to know the tax laws applicable to your life settlement income
  • You may have difficulties to be eligible for some federal aid, including Medicaid

Questions You Should Ask When Doing A Senior Life Settlement

  • Who is my policy - is it a life settlement company? A life settlement broker?
  • Will the buyer keep my life policy or sell it to others?
  • Is the life settlement company or life settlement broker licensed?
  • Am I getting a fair price for selling my life insurance policy?
  • Is the life settlement provider legitimate and honest?
  • Do I understand clearly all the details involved in a senior life settlement, including the costs and fees?
  • Will I have to reveal private information? Who will have access to my information?
  • Will I lose out benefits as a result of selling my life insurance policy and getting a senior life insurance settlement?
  • Will I be able to handle well the lump sum in exchange for my life policy?
  • Am I really in need for the cash now, and am I completely sure that I want to give up the death benefits?
  • Do I want to leave my death benefits as a legacy or gift to a survivor?


In all cases, remember that the life policy is yours as long as you don't sell it, and it's your money.

Do not let anyone rush or push you into a senior life policy.

Take your time to think it through before selling your life insurance.

Shop around prices, do background research on the life settlement companies or brokers.

Do your due diligence and request clear and detailed information on the process and everything that is involved in the life settlement.

Read also: what to ask from life settlement providers

What's Your Experience With Senior Life Settlements?

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