Traditionally, life settlements – the sale of an unwanted or unaffordable life insurance policy for substantially more than the policy’s cash surrender value — have significantly benefitted seniors by providing them with resources to help pay for rising health care costs, medical bills and other needs in retirement.
(Related: Where the Life Settlement Business Is Now — And Where It’s Going)
For a policy to have value in a life settlement, the insured person under the policy typically needed to be in their mid-to-late 70s and have had a decline in health since the policy was first issued. Health impairments such as diabetes, heart disease, cancer or other serious medical conditions were often necessary in order for the policy to be sold.
But now, even healthy seniors – those whose health has not significantly declined from when they first took out the policy – have the option to sell their policies and generate income that can be used to invest in their retirement or pay for anticipated healthcare, long-term care, and other future expenses.
A healthy senior can qualify for a life settlement by meeting three criteria:
- The policy must be a guaranteed universal life (GUL) policy.
- The insured typically must be age 75 or older.
- The policy’s death benefit must be at least $250,000.
A policyowner who meets these criteria can receive an offer to purchase the policy without the need for a medical record review or underwriting. Offers to healthy seniors are usually made within 24 hours of receipt of the required information from the buyer.
This is good news for healthy seniors with GUL policies when compared to traditional life settlements. First, they wouldn’t typically even qualify for a life settlement. Second, traditional life settlement transactions take several months to complete because of the need for comprehensive medical record collection and review, along with a detailed analysis of the policy. Healthy seniors are amazed at how fast and easy it is to sell their policy and receive the funds.
At Lighthouse Life, even when a life settlement transaction requires medical underwriting, we significantly shorten the process of assessing the health status of the insured with a quick telephone health interview. Our time to complete the transaction and get the life settlement proceeds to the seller is usually several weeks, not months.