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A Senior Life Settlement means the sale of an insurance policy to a third party at a value less than the face value of the policy. The buyer of the policy is liable to pay all future premiums on the policy, while the original holder of the policy gets a lump sum in cash. This lump sum is an amount that exceeds the cash value of the policy accrued till that date. Senior Life Settlement is opted for by senior people (above the age of 65 years) who do not have any further intention of maintaining their policy premiums. Once they communicate with a life settlement provider regarding their policy settlement, the provider buys the policy from them and collects their premiums in an escrow account. As soon as a buyer is available, the policyholder stops paying the premium and the new buyer continues from that point on. The accumulated amount till that date, along with all applicable interests, is given to the original senior policyholder. People usually take policies in their younger days when they are building homes and expanding their policies. The express purpose of holding a policy is to create security in the unfortunate circumstance of a person's demise. However, when people reach old age, they no longer have the obligations they had in their younger days. They also may not be able to pay future insurance premiums due to retirement or some other reason. Naturally, it makes sense to settle the policy rather than to allow it lapse. This realization is compelling several senior citizens today to get their policies settled. Elderly people who wish to explore new cost-effective avenues like higher paying policies or care insurance policies may also opt to settle their old policies. Another reason may be an urgent need for funds to start some profitable enterprise. Senior Life Settlements are often confused with viatical settlements. Viatical settlements are provided to terminally ill people, regardless of age. To be qualified for a viatical settlement, the person must have a life expectancy of less than two years from that point on. But Senior Life Settlements are provided to anybody over the age of 65 years. Their life expectancies could be 10 to 15 years, depending on the policy of the company. Senior Life Settlements also require a minimum amount on the face value of the policy held, which again differs from company to company. Also, the policy must be more matured than the contestability period, which is often two years from the date the policy is made. |