Life Settlement Basics
Most people are unaware that 85% of all life insurance policies never pay a death benefit1. A life settlement* is a financial service that allows a policy owner to sell an unneeded or unwanted life insurance policy for cash. Life settlements provide 300% of the cash surrender value on average.2,3
It is always better to evaluate selling your life insurance than to simply let the life insurance policy lapse. If you simply let your life insurance policy lapse, you'll have no chance to receive a return on the years of premiums you've paid into the policy.
The average life settlement provides 10-20% of the policy's face value.2,3 The buyer of the policy takes over the monthly premium, which allows the policyowner to get rid of an ongoing expense.
People turn to life settlements for many different reasons:
- Life insurance policy premiums have become unaffordable
- Beneficiary passes away before the insured
- Maturity of term policy
- To pay for healthcare costs
- To help fund retirement
To get a ballpark idea of what your policy might be worth, try using a life settlement calculator.
Alternatives
Basically, consumers have four alternatives of how to deal with an unneeded or unwanted insurance policy.
| * Some policies have a fourth option of turning the policy in to the insurance company for cash, but a life settlement will provide 300% of that amount on average.1 | ||
| Keep Insurance Policy | ||
|---|---|---|
| You pay policy premiums |  |
Your original beneficiaries receive proceeds |
| Let Policy Lapse | ||
| You stop paying the premiums | |
Insurance company keeps all proceeds |
| Use a Life Settlement | ||
| You receive cash for the sale of your policy now. You stop paying premiums and the buyer begins paying them. | |
Life settlement buyer receives proceeds |
How are bid amounts determined?
Your settlement amount will be determined by the following factors:
- Policy face amount
- Cash surrender value of the policy
- Premiums
- Your age
- The type of policy you have
- Your health
Buyers have different needs for their investment portfolios and each has their own interpretation of life expectancy, which is the single biggest factor in determining the settlement offer.
To maximize the value for your policy, it's important to choose an experienced life settlement broker with access to a large pool of funders who will compete for your policy. Most life settlement funders will only buy policies through brokers, as they don't have the infrastructure in place to deal directly with consumers.
When you win, we win.
There are no upfront costs to the person selling the life insurance policy. If the life insurance policy is successfully sold, then the only cost you pay is the broker's commission. We will disclose our fee to you in advance, so you have a clear idea of what the net benefit will be from your life settlement transaction.
Golden Gateway's commission is based only on the amount of money that we negotiate for you over the cash surrender value - not on the total bid amount. We only get paid when you get your money. Our fee will come directly from the investor who buys your policy.
Interested in learning how all this would work for you? Request a call from us, and we'll begin to evaluate your life insurance policy - to help you decide if a life settlement transaction makes sense for you.
Insurance Studies Institute, 2008
2 Data Collection Report 2006, Life Insurance Settlement Association (LISA)
3 According to Golden Gateway Financial, customers on average received
10% of the face amount of their policies over the last 6 months.
4 Golden Gateway Financial customers on average received 10% of the face amount of their policies over the last 6 months.
