Today I would like to share some useful info with you brought to us by Felix Steinmeyer, Mason Finance Inc. of San Francisco. I’m sure you’ll find this post quite interesting because Felix has some important data to share with us.
Many people don’t realize they can sell their life insurance policies for cash- often for much more than the surrender value. In a life settlement transaction, the policyholder transfers their policy to a third party who then continues to pay premiums, ultimately collecting the death benefit.
Despite the immense benefits provided by a life settlement, most people are unaware of the option. Sadly, 250,000 policyholders lapse on their policies annually. This totals over $13 billion, an average of $51,300 per person. To help increase public knowledge of the life settlement option, we have written an article to explain the numerous benefits of selling a life insurance policy.
Most people who consider a life settlement either cannot afford their premium payments or no longer need the coverage provided by the policy. Without the knowledge of life settlements, owners generally allow their policy to lapse or request the surrender value which is typically only a few thousand dollars. Life settlements are so powerful because they can reverse the situation. Instead of receiving a small amount of money or nothing, a policyholder can earn tens of thousands of dollars.
Additionally, life insurance premiums are a burdensome expense that generally increase as you age. When you sell your life insurance, the purchaser of the policy becomes responsible for maintaining premium payments. Not only do you receive a cash payment up front, you no longer have to pay anything to the insurance company. Most policyholders end up saving over $1,000 per year.
This twofold financial benefit is the best part of a life settlement transaction. The policyholder receives a large sum of money upfront and continues to save thousands of dollars for the rest of their life.
The money from a settlement can be put towards long term care costs, medical bills, home renovations and mortgages, or just saved to enjoy your retirement. The money is paid in full and can be spent or saved at the policyholder’s discretion, but most people use this freedom to supplement their retirement income or savings.
Presently, the average American has roughly $200,000 in retirement savings at age 65, and
the Bureau of Labor Statistics reports that most retirees spend $45,000 per year. This means that even with retirement income and Social Security most people will quickly exhaust their savings. The increasing costs of healthcare and long-term care aren’t helping either.
For these reasons, it is crucial for retirees to identify ways to save and earn extra money, and selling a life insurance policy is an excellent way to boost retirement savings by over 25%. The payout affords the flexibility to spend the money in any manner, so the policyholder can decide what their priorities are.
Other than the financial component, selling your life insurance policy can greatly reduce the emotional stress of retirement planning. The thought of no more premium payments and the security provided by the payout can alter your outlook on retirement. You have the peace of mind of more money in your bank account and fewer expenses in the future.
Many thanks to Felix Steinmeyer for providing this valuable material. Felix is CEO of Mason Finance Inc. of San Francisco. He is a licensed life insurance settlement provider, member of LISA and received his MS and MBA from Stanford University.