“Life settlements can be a big risk,” said one party to the other. While it may sound like a risky endeavor, life settlements can have benefits as well.
What is a Life Settlement
Your life insurance policy is an asset. You can sell it to another party for cash. This transaction is called a life settlement.
People often sell their life insurance policy when they feel that they don’t need it anymore or when it’s no longer effective to them. The move has both advantages and disadvantages.
Life Settlements – Pros
Most people turn to life settlement due to life changes, such as retirement and divorce. When you think about it, access to cash is the only benefit of a life settlement. However, the good thing is that you can use this cash in many ways.
In fact, many seniors use the cash to buy a new life insurance policy. Moreover, it can be used to pay bills and get rid of sudden expenses.
However, the important thing here is to not accept what your insurer offers you. Instead, work with an advisor to reach a deal that’s more advantageous to you.
A life settlement can be a good idea if you:
- Cannot afford to pay costly premiums.
- Do not need the benefits anymore.
- Need to sell assets to meet other expenses.
A life insurance policy works as a gift for your loved ones when you’re not there. However, in some situations, it can be more beneficial to sell the policy during your lifetime.
You can use the money to boost your investment and even qualify for programs such as Medicaid.
Thanks to the presence of companies like Mason Finance and improved consumer awareness, customers can benefit more from selling their life insurance policy.
Life Settlements – Risks
Here are some of the risks involved in a life settlement:
- Fees and Commissions: Your firm may charge you a fee for preparing your life settlement documents. However, many financial firms are often willing to do it for free as well. This is because a life settlement does not only benefit you but benefits the firm as well. Nonetheless, you will have to pay a commision.
- Be sure to be clear about this factor so that you know exactly how much money you will make.
- Privacy: There is a risk of your private information reaching unsafe hands. Preparing life settlement documents requires private documents such as medical information.
You must work with a firm that is trustable so that the risk of your private information leaking out is reduced.
- Tax Issues: There can be tax implications when you sell your life insurance policy so make sure to speak to an expert about it,or an online tax calculator.
- Duration: Dealing with a company that takes months to process payment can kill the purpose. Three to four months is a good period.
At Mason Finance, we process payment in 90-120 days and also offer ‘urgent’ services.
At Mason Finance our goal is to help you get the most out of your life insurance policy.