Life insurance policy owners can now take advantage of important financial opportunities using the proceeds of an unwanted, unaffordable or obsolete life insurance policy. Prior to the evolution of the Life Settlement industry, any person who owned a policy that was no longer wanted, needed or affordable, only had the option to lapse, cancel or surrender the policy to the carrier for the cash surrender value. Life insurance companies now face competition for the surrendered policies that they once monopolized. Life settlements have become a very important factor in liquidating an otherwise dormant asset.
A life settlement is the sale of a life insurance policy for an amount greater than the cash surrender value, but less than the face value. A life settlement allows you to convert a non-performing, illiquid asset into cash or another financial product that is more suited for your present stage of life. Life insurance is like any other asset: it is only worth paying for if it is valuable to you. If your life circumstances have changed so that your policy is no longer useful, why would you continue to keep it? By selling the policy you can extract value from the policy instead of simply abandoning it. Life insurance premiums can be expensive, especially if you no longer have a need for the coverage. A life settlement offers you a way to eliminate those high monthly premiums and still capture value from you asset.