The Benefits of a Life Settlement
Life settlements provide a host of benefits to consumers. They also address the key challenges that now lead to dissatisfaction and disappointment among life insurance policyholders. Here are some of the key benefits to consider:
Provides an Exit Strategy for Unwanted Policies
Life settlements give policyholders an opportunity to generate returns that can be three to four times cash surrender value. The cash payments they receive enable them to abandon existing policies and make decisions that would otherwise not be open to them.
Imagine you were holding a 10-year, Php 1 million life insurance policy. You can now recapture some of the value you invested in the policy. You purchased it when you were 65 and now you are 75, but you have no interest in paying the rising premiums.
Now, you can sell the policy for Php200,000 in the secondary market that would otherwise have yielded Php50,000 in cash surrender from your life insurance carrier. It’s clear that a life settlement generates a better cash outcome for you, the policyholder.
Enables Individuals to Purchase Better Performing Policies
Life settlements enable policyholders to obtain the cash payments necessary to purchase replacement policies. In some cases, they may even be able to purchase policies with their life settlement payments that eliminate the necessity of making premium payments thereafter. Others choose to purchase replacement policies and “cash out” part of the value of their existing policies and use the money for other purposes.
Provides Freedom and Flexibility
Consumers now have the freedom and flexibility to take the proceeds from a life settlement and use them as they see most appropriate. They may want to give cash gifts to family members. They may want to use the money to engage in charitable giving. Some may even want to remove a policy from an estate due to a reduction in size of their assets.
More and more people are discovering that they do have choices in the realm of life insurance. By enabling policyholders to seek the highest bid available in the secondary market, life settlements typically yield three to four times the surrender value. As a result, policy owners are not tied to the decisions of the past. They have the freedom and the flexibility to go forward.
Life Settlement Scenarios
To gain a better understanding of that might encourage someone to abandon a life insurance policy and the benefits that one might derive from a life settlement, it’s useful to consider some common scenarios. These examples demonstrate the changes and choices that people will face when they engage in a life settlement, but also some of the opportunities they are able to seize. Here are some typical scenarios based on real-life cases and experiences:
Replacing Multiple Insurance Policies to Realize Big Savings.
One 80- year-old retired business owner held multiple insurance policies with Php5 million in death benefits. His annual premiums were Php426,113. His objective was to obtain the same death benefit while reducing his substantial annual premiums. Through a life settlement, he sought the money to fund a single Php5 million policy. Based on the highest offers available to him, he was able to obtain life settlement proceeds of Php950,000. Those proceeds enabled him to fund a new policy with the same coverage; however, annual savings in premium payments will total Php125,312.
Eliminating Premiums through a New Policy.
A 75-year-old woman held a life policy for Php2.5 million. However, her annual premiums of Php85,130 were becoming far too costly. Moreover, one of the beneficiaries for which she had held the policy preceded her in death. Considering the changing circumstances in her life, she sought a different policy. Having received a life settlement offer of Php779,000, she used the proceeds to purchase a new single premium policy with a Php1,300,000 death benefit. As a result, this individual was able to completely eliminate annual premiums – saving Php85,130 a year.
Enabling a Comfortable Retirement with Php1.1 Million Settlement.
One 73-year-old business owner wanted to sell his company, but was unable to solicit an offer that he considered sufficient for his retirement needs. Working with his advisor, he realized he could sell his business-owned policy on the secondary market. The term policy, which had a face amount of Php5 million, had no cash value. The life settlement transaction, however, yielded him Php1.1 million – enabling him to take the proceeds and fund a comfortable retirement.
Salvaging a Policy from Lapse to Protect a Home.
One 78-year-old man was unable to keep up with his premiums for a Php250,000 policy and was in danger of losing his home due to mounting bills and unpaid loans. He had experienced unexpected health problems that were not covered by Medical benefits. He had also provided money to a grandchild for college tuition. Now, he found himself in difficult financial straits. He was unable to pay his escalating life insurance premiums and was prepared to let the policy lapse. He was even facing foreclosure on his house. Then a friend told him about life settlements and he asked a financial advisor. As a result, the Php70,000 payment he received within a week of seeking bids and a day of selling his policy has helped him pay off some troubling debts and keep his home.
As these scenarios suggest, there are far-reaching – even life-changing – benefits to be realized through life settlements. They represent smart money management in many cases – a financial tool to maximize the value of one’s life insurance assets. In other cases, they represent a means of addressing mounting problems and gaining financial security. In every case, life settlements offer superior value to the individuals who choose to take advantage of them.
Life settlements provide a host of benefits to consumers. They also address the key challenges that now lead to dissatisfaction and disappointment among life insurance policyholders. Here are some of the key benefits to consider:
Provides an Exit Strategy for Unwanted Policies
Life settlements give policyholders an opportunity to generate returns that can be three to four times cash surrender value. The cash payments they receive enable them to abandon existing policies and make decisions that would otherwise not be open to them.
Imagine you were holding a 10-year, Php 1 million life insurance policy. You can now recapture some of the value you invested in the policy. You purchased it when you were 65 and now you are 75, but you have no interest in paying the rising premiums.
Now, you can sell the policy for Php200,000 in the secondary market that would otherwise have yielded Php50,000 in cash surrender from your life insurance carrier. It’s clear that a life settlement generates a better cash outcome for you, the policyholder.
Enables Individuals to Purchase Better Performing Policies
Life settlements enable policyholders to obtain the cash payments necessary to purchase replacement policies. In some cases, they may even be able to purchase policies with their life settlement payments that eliminate the necessity of making premium payments thereafter. Others choose to purchase replacement policies and “cash out” part of the value of their existing policies and use the money for other purposes.
Provides Freedom and Flexibility
Consumers now have the freedom and flexibility to take the proceeds from a life settlement and use them as they see most appropriate. They may want to give cash gifts to family members. They may want to use the money to engage in charitable giving. Some may even want to remove a policy from an estate due to a reduction in size of their assets.
More and more people are discovering that they do have choices in the realm of life insurance. By enabling policyholders to seek the highest bid available in the secondary market, life settlements typically yield three to four times the surrender value. As a result, policy owners are not tied to the decisions of the past. They have the freedom and the flexibility to go forward.
Life Settlement Scenarios
To gain a better understanding of that might encourage someone to abandon a life insurance policy and the benefits that one might derive from a life settlement, it’s useful to consider some common scenarios. These examples demonstrate the changes and choices that people will face when they engage in a life settlement, but also some of the opportunities they are able to seize. Here are some typical scenarios based on real-life cases and experiences:
Replacing Multiple Insurance Policies to Realize Big Savings.
One 80- year-old retired business owner held multiple insurance policies with Php5 million in death benefits. His annual premiums were Php426,113. His objective was to obtain the same death benefit while reducing his substantial annual premiums. Through a life settlement, he sought the money to fund a single Php5 million policy. Based on the highest offers available to him, he was able to obtain life settlement proceeds of Php950,000. Those proceeds enabled him to fund a new policy with the same coverage; however, annual savings in premium payments will total Php125,312.
Eliminating Premiums through a New Policy.
A 75-year-old woman held a life policy for Php2.5 million. However, her annual premiums of Php85,130 were becoming far too costly. Moreover, one of the beneficiaries for which she had held the policy preceded her in death. Considering the changing circumstances in her life, she sought a different policy. Having received a life settlement offer of Php779,000, she used the proceeds to purchase a new single premium policy with a Php1,300,000 death benefit. As a result, this individual was able to completely eliminate annual premiums – saving Php85,130 a year.
Enabling a Comfortable Retirement with Php1.1 Million Settlement.
One 73-year-old business owner wanted to sell his company, but was unable to solicit an offer that he considered sufficient for his retirement needs. Working with his advisor, he realized he could sell his business-owned policy on the secondary market. The term policy, which had a face amount of Php5 million, had no cash value. The life settlement transaction, however, yielded him Php1.1 million – enabling him to take the proceeds and fund a comfortable retirement.
Salvaging a Policy from Lapse to Protect a Home.
One 78-year-old man was unable to keep up with his premiums for a Php250,000 policy and was in danger of losing his home due to mounting bills and unpaid loans. He had experienced unexpected health problems that were not covered by Medical benefits. He had also provided money to a grandchild for college tuition. Now, he found himself in difficult financial straits. He was unable to pay his escalating life insurance premiums and was prepared to let the policy lapse. He was even facing foreclosure on his house. Then a friend told him about life settlements and he asked a financial advisor. As a result, the Php70,000 payment he received within a week of seeking bids and a day of selling his policy has helped him pay off some troubling debts and keep his home.
As these scenarios suggest, there are far-reaching – even life-changing – benefits to be realized through life settlements. They represent smart money management in many cases – a financial tool to maximize the value of one’s life insurance assets. In other cases, they represent a means of addressing mounting problems and gaining financial security. In every case, life settlements offer superior value to the individuals who choose to take advantage of them.
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