Life insurance settlements are a great way for retirees to gain a bit of extra cash in times of need. They are generally a win-win for everybody involved, from your clients who receive them to the institutions that invest in them. While there are lots of rules and regulations surrounding the practice of settling life insurance policy, it can definitely be a great way for policyholders to receive funds if they realize they no longer want or need their policy. In this blog, we’ll cover a few reasons why your client may need a life insurance settlement.
1. Pay Off Outstanding Debt
Debt restrains individuals and oftentimes keeps them from doing the things they’d like to do with the cash they spend repaying it. Taking on debt has become a normalized part of the American lifestyle as people purchase cars, houses, and even electronic devices. As of 2021, the average American holds nearly $100,000 in debt. This includes all types of debts such as personal loans, credit cards, student loans, and medical debt. A life insurance settlement will allow clients to clear themselves of any debt that may follow them or their beneficiaries after they pass.
2. Fund Alternative Investments
The best financial ideas often come to you when you’re older and have gained more life experience. Sometimes, your clients may need a bit of extra cash to help fund a lucrative investment opportunity that may have presented itself. In some cases, these investments may provide more monetary value to their beneficiaries than their life insurance policies would’ve produced upon their passing. Whether it is the generation of a business or simply sticking funds into dividend-paying stocks on the stock market, utilizing life settlement money to create an alternative source of revenue through investments is a very smart move for eligible clients.
3. Cease Paying Life Insurance Premiums
Whether it is due to a changing financial situation or the need for additional funds, clients sometimes decide they simply do not need nor want their policy any longer. Simply surrendering the policy could leave your client no longer paying the monthly premiums, but won’t provide them with much else. In rare cases, they may even be vulnerable to surrender fees, depending on their specific contract. Eligible clients looking to let go of their policy will benefit greatly from a life settlement. Not only will they be able to get rid of their life insurance policies without fees, but they’ll also be able to gain a substantial lump sum payment depending on their age, health condition, and current monthly premiums.
4. Medical Expenses
Going to the hospital is very expensive, especially in the United States. The frequency at which you’ll need to receive treatment will undoubtedly rise as clients age. Nearly a third of American workers hold some type of medical debt and the number is predicted to rise annually. A life settlement gives clients the opportunity to free themselves from mounting health bills as they age.
5. Living Better In Retirement
A significant portion of the population isn’t confident that their retirement fund will last them from retirement age till the day they pass. A large, lump-sum payment in the form of a life insurance settlement will allow clients to add to their existing fund. This could substantially improve their quality of life over the decade or more they expect to be retired.
Providing Clients The Guidance They Need
There are many reasons individuals may require a life settlement. Above are just a few of them, but clients may need an injection of cash for a variety of other reasons that will enhance their quality of life. When advising a client on life settlements, keep these reasons in mind in order to better assist them with their decision.