What is a life settlement?
A life settlement is the sale of an insurance policy to a third party. As the new owner and beneficiary, the third party continues to pay policy premiums and collects the face amount of the policy at the death of the insured. Policies in a life settlement are typically unneeded and unwanted individual life insurance policies, typically with an insured who is a senior over age 65. The price paid for the policy is greater than the policy cash surrender value (“CSV”) offered by the issuing life insurance company (life insurance contracts define the maximum value the issuing life insurance company may pay to redeem a policy as the CSV). Life settlement policies are typically universal life policies purchased as investments by people who are now in their seventies and eighties and wish to use this capital for other purposes.
