5 Reasons Life Settlements Are Making a Comeback
Life settlements are officially making a comeback this year. These settlements began to decline starting in 2008 due to the changing financial landscape that altered people’s decisions when it came to financial longevity. One article written by LifeHealthPro states that it is due in part to the growing confidence in people’s life expectancies, as well as an increasing need for investments that give alternatives to the current low interest rate environment. On top of this, the costly stock market now has money being put back into these life settlements. The term “Life Settlement” is used to describe selling a life insurance policy that is already in existence to a third party. They are usually sold for a higher price than their cash surrender value, but not their net death benefit. An experienced institutional investor typically buys out life settlements, and policies are usually larger than $250,000. Here are five reasons why you should expect a substantial increase in life settlements in 2014.
People Don’t Want As Much Coverage
Many people who have a universal life insurance policy experience raised interest rates after going through a long period of low ones. However, now that their premiums are steadily increasing, many people are turning to life settlements as a means of providing an alternative to those who don’t want as much coverage or for those who let their insurance policies lapse.
Senior Citizens No Longer Want or Need the Extra Coverage
Seniors who are past the age of sixty-five don’t often have a need for their entire life insurance coverage once they are well into their retirement. Instead taking a life settlement provides a way for older citizens to receive the alternative investment that they require.
Larger Pension Funds Are Now Hitting the Market
In this day and age there are bigger pensions funds that are hitting the market. Due to the fact that interest rates are quite low, investors have been looking for an alternative. Life settlements can provide just that. This is because they give those people with larger incomes a much savvier long-term investment option that won’t directly be impacted by the stock and bond market.
The Untapped Market
There is an untapped market for smaller life insurance policies. Those policies those are lower than $500,000 is going to substantially increase in popularity in the next coming years. There are many investors who are now realizing the great potential in this market and so are working to develop much easier underwriting methods in order to acquire and manage their life insurance policies more simply.
Consumers are Becoming More Aware
As life settlements declined in 2008 they left the public eye, and many forgot about their existence entirely. However, now as they are gaining back their popularity, consumers are becoming more and more aware of their existence and their interest is piqued. In fact, as high as forty-two states have implemented some sort of legislation in order to regulate life settlements, and six states have taken on the full adoption of them. Such organizations as the National Conference of Insurance Legislators also now makes it a requirement for life insurance companies to inform senior citizens that life settlements are a viable option in order to covert a surrendered or even lapsed life insurance policy.
Life settlements are not for everyone, however they are an option that is worth looking into for people that are in need of an alternative method of downsizing or getting rid of their life insurance policy apart from surrendering their policy or letting it lapse.
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