The Truth Behind Life-Settlement Options

The Truth Behind Life-Settlement Options:

Long-Term Care Made Possible

Picture this: You’ve saved your whole life for retirement, including investing in life insurance. As you advance into the decade or two past retirement age, you realize that your income stream from your retirement savings and social security isn’t enough to cover your needs. In fact, you can’t even afford to continue paying your life insurance each month. What do you do? Should you A) just let your policy lapse and throw away those years of investment, or B) surrender the policy to the insurance company and take what they give you?

Enter choice C: the life-settlement option. I had the chance to sit down with Michael Neider of Med Guardians (a member of the International Life and Structured Settlement Exchange) to find out exactly what life settlement means and how it works. “What most people don’t know is that life settlements have been around for more than 20 years,” Michael shared. “They’re not for every situation and every life insurance policy, but there are certain situations where the sale of a policy is a really good financial decision. Life settlement simply allows a senior to sell their life insurance policy on a secondary market for significantly more than the surrender value from the insurance company. Most people also don’t know what the ‘surrender value’ is, and that’s just the amount refunded from the insurance company; it’s the premiums you’ve paid into the policy, and it could be less fees or with interest taken out. Typically, the seller in a life settlement receives a payment that’s less than the death benefit, or face amount, but much higher than the surrender value. And of course, the insured is then no longer required to make premium payments on the policy.”

Quite simply, this can be a life-saving option for many seniors. Several states have passed laws requiring insurance companies to disclose this option to seniors when they are considering surrendering their policy, but unfortunately, Ohio is not yet one of them. That’s why it’s so important to get this information out there to the public, as the insurance companies in our state are not required to let anyone know they have a choice.

 

So, why might someone need or want to trade their life insurance in for a life settlement? “It’s about life changes,” Neider said. “They’ve been working all these years and now they’re living on a fixed income, a retirement income, and maybe they can no longer afford their life insurance premium. Maybe they bought a policy 20 years ago that was based upon some projections in interest rates, but with current interest rates the policy just isn’t paying for itself. Maybe they’re going through a divorce or bankruptcy. Maybe they’re a high-net-worth person and they bought the policy for estate tax planning purposes but recent changes in the tax laws have negated the reason for having life insurance for estate planning in the first place. There’s a whole host of reasons why someone might sell their policy, but typically what they’re trying to do is to create funds so they can use those funds elsewhere. In our business, in the market that we serve, it’s for paying for their long-term care health services, the ones they never anticipated such as private pay for assisted living or memory care. People typically just haven’t planned for those needs to arise.”

We here at HandyPro make it our business to help seniors, including supporting you in protecting your interests, investments, and quality of life. Please share this article with your friends and loved ones to let them know that they have more choices than they may know of when it comes to accessing finances for long-term healthcare. 

For more information on how HandyPro can help you make your home (or business) a safe, accessible environment, for life, or to better understand how we partner with companies like MedGuardians, to help connect you with a full slate of Aging In Place services, please contact me (Brian Pritchard) at 216-212-7531 or visit us at www.StayAtHomeModificationsInc.com today!

If you live in northeast Ohio and would like more information about life settlements, visit Med Guardians at www.medguardians.com or call 800-229-7149.