An insurance expert explains why senior citizens should not cash in their life insurance policies for their current cash surrender value, when that policy can be sold through a life settlements brokerage to a buyer for more than 3 to 5 times the cash value of the policy.

Memphis, TN (PRWEB) September 19, 2006 -- According to Daniel Katz, Vice President of Operations for Settlements for Life, senior citizens who are contemplating cashing in their life insurance policies could receive 5 times or more than the cash value of their policy by not cashing that policy in at its current cash surrender value. Instead, by using a reputable life settlement brokerage firm, a buyer can be found to purchase that policy and take over the payments on it. While the buyer ultimately reaps the larger financial benefit at the time of that person’s passing, the individual receives a lump sum payment for that policy that is typically substantially higher than the policy’s current cash surrender value.”


Here’s how it works: A life settlement is the sale of a life insurance policy, whereby, the owner of the policy receives more than the cash surrender value of the policy. After an application is submitted by an individual, medical and insurance carrier information is gathered to help evaluate whether an existing policy might be attractive to a buyer who invests in this kind of product. To qualify, individuals must be age 65 or older and the policy must have a death benefit of at least $250,000. Once it is determined that the policy is worthy of purchase, a life settlement firm sends the policy to companies who are buyers in the marketplace. After the sale is made, the buyer will continue to make the premium payments for as long as that individual lives.

“This is a previously untapped asset that most elderly people don’t even know they have,” says Katz, who has helped scores of individuals to get extended cash value for their policies. For example, Bill Johnson (name changed to maintain confidentiality), was 82 years old, in good health, and still working. With premiums of $80,000 a year, his estate planning attorney advised him to sell his policy. “Surrendering that policy for the cash value would have netted Bill $105,613. However, by selling his policy to an interested buyer, we got Bill $515,000 for his $1.5 million policy,” says Katz.

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Society & Culture - Podcast Date: Wed, 13 Sep 2006 15:51:24 -0700