This article provides a detailed overview of life settlement strategies, highlighting their role in retirement planning, key industry players, and regulatory considerations. It emphasizes the benefits for seniors seeking liquidity from their life insurance policies. Learn how these transactions work and what to consider before engaging in a life settlement.

What You Need to Know About Life Settlements

Life insurance policies are vital financial tools for many families, businesses, and individuals. The concept of selling these policies evolved with the establishment of the life settlements industry in 1911, thanks to legislative actions. This sector gained momentum in the 1980s, driven by advances in medicine and technology. Usually, seniors aged 65 or older who are in good health participate in these transactions, selling their policies for cash.

Policyholders can receive a lump sum by selling their policies, while a third party takes over premium payments. Regulations vary by state concerning the waiting period before a sale is finalized. The industry supports retirement planning, offering income and long-term care solutions for seniors in mid- to low-income brackets.

Major companies include:

Welcome Funds - Founded in 2000, has facilitated over 10,000 life settlement deals worth more than $450 million in 13 years. They help sellers connect with multiple buyers and provide expert guidance.

Ovid Life - Known for its consumer-focused approach, Ovid operates a free platform linking sellers with licensed institutional buyers, who typically pay around 22% of the policy’s value. In 2017, it handled approximately $1.8 billion in life insurance transactions.

Note: This overview combines research, expert insights, and data. Offerings and conditions may differ based on individual or institutional factors. Readers should seek advice from financial professionals before proceeding, as the information may change over time or vary by region.