How Smart Seniors Use Life Settlements
Hi! This is David Mickelson from Mickelson Capital Consulting, and today’s topic is how smart seniors use life settlements.
Well to begin with, life settlements are the sale of a life insurance policy. But before I talk about how smart seniors use them, one note of extreme caution. Most seniors who own life insurance should not engage in selling their policies. And the reason is, life insurance is an extremely valuable and important asset. There is a limited amount of insurance that any one individual can get, and it’s most valuable to the family.
The fact that it’s sellable in a life settlement is an ancillary benefit to a policy. And I encourage everyone to seriously consider not ever selling their policy, and focus on keeping a policy rather than selling it. But having said that, the most important benefit of the advent of a life settlement market and how to use it, is the peace of mind it gives seniors knowing that should their circumstances change they can sell it.
So what that means is an individual who is being offered insurance can consider it an asset instead of an expense. Now even though that’s a nuance, it’s hugely important. That means if someone is thinking of buying insurance, they can comfortably apply and for own as much insurance as they qualify for and it makes sense to them. Why? Because they’re not locked in forever.So that means that there’s a greater flexibility in the market for seniors making decisions and not being locked in forever.
So the most important factor is don’t sell a policy unless you’re confident that it’s the right thing to do from a professional financial advisor. Number two, when buying insurance, it gives you peace of mind knowing there’s an exit strategy.
Now, the way seniors use life settlements, is that they can use the cash for any purpose because that’s a sale of the policy for cash. But more importantly, if they still have capacity to buy more insurance with their proceeds, I often recommend that people do that. Because oftentimes they can get a new policy for somewhat less, if not a lot less, than they were paying before. Also they can vary the amount of insurance.
Remember, when you have a great big policy, in the future you may need a smaller policy. By a life settlement you can always replace what you’ve had before with a smaller policy, provided you still insurance capacity. I’ll explain the capacity issue in another presentation.
With that, I thank you for your time, enjoy your day.