You could just say that it’s no longer your father’s life insurance policy — it’s much better. Retained death benefit options are simply the most exciting development in the life insurance settlement industry in years and a powerful new retirement planning tool.
Seniors now have the ability to sell a portion of a life insurance policy for cash and retain a percentage of the face value payout for their loved ones. All while empowering them to reduce debt, pay medical bills, pay for long-term care, fund a retirement plan, or purchase a new policy.
So what’s new? New options. For decades, many seniors have taken advantage of their ability to sell unwanted or unneeded life insurance policies. In fact, laws in some states require agents to offer the settlement option for surrendered or soon-to-be-lapsed policies.
But consider policyholders in their 70s and in relatively good health. If their spouse is no longer living, or their estate plans have changed, what to do with life insurance purchased years ago that is no longer desired?
Settlement is a long-standing and successful alternative, demonstrated by thousands of transactions, and a better option than surrendering or allowing a policy to simply lapse. Selling the policy to a settlement company delivers cash to the insured. But the company becomes the owner, makes the future premium payments and receives the death benefits.
For seniors, retained death benefit options offer a superior alternative when selling the policy. They gain immediate cash, retirement flexibility and peace of mind, while also retaining a portion of the policy’s payoff value. The insured is no longer responsible for premium payments but gets to keep part of the death benefit in his or her estate.
Here’s how it works: