Life Settlements: Getting Cash From Your Insurance Policy. Good or Bad Choice?

Did you know that you can get a lot of cash for selling your life insurance policy? It sounds to good to be true doesn't it?

Well like anything else in the financial market for Seniors there are good and not so good aspects to it. There is a good article on the Financial & Tax Fraud Education Associates blog that goes through many of the details.

In a nutshell, it works like this:

1. Let's say you're 72 years old with a $1M life policy that is current.
2. You are also almost out of cash and facing very high costs associated with in-home care or nursing home care

What are your options?

1. The financial markets have created one for you!
2. They will buy your $1M life insurance policy for , say, $200k (plus or minus depending on the actuarial tables) and continue paying the premiums for you!
3. You get the cash and name them the beneficiary of the policy

Does this make sense? It could in some cases. Depending on how long the senior actually lives will determine if the "Investor" or the Senior actually comes out ahead. The definite loser could be the Senior's heirs however.

If the heirs were well informed it might make good sense for them to "purchase" the policy from the senior by paying for the senior's care needs going forward in exchange for being named beneficiary. Just my opinion though.

Read the article and discuss with your financial advisor as this is just another tool in your financial toolbelt.