Why 2021 is an Important Year for Life Settlements
With the new year, it is important to learn about your financial options, specifically, life settlements. A life settlement is the
sale of a life insurance policy to a third party for cash. Typically performed
by individuals age 65 and older, typically, a life settlement will be 3 to 4
times the surrender value of your policy, but it will always be lower than the
death benefit of your policy.
According to a 2018 study by investment management firm
Conning, "$200 billion worth of life insurance will lapse or be
surrendered each year through 2027 — all of which could qualify for a
life settlement and be pocketed by the policyowner."
88% of all universal life policies that are issued
are either lapsed or surrendered. This is without payment of a death benefit
because the owners of the policy no longer have the need of their policies or
in most cases, can no longer afford them.
The facts above highlight why life settlements are relevant
no matter the year, but as we all know 2021 is a unique year, and the life
settlement space has an important role to play:
It's no secret that
COVID-19 has had a destabilizing effect on retirement accounts and investment
portfolios. Couple that with the fact that millions of Americans have lost
their income sources in the past year, and the growing retirement income crisis
seniors face and you have a serious gap in capital. A life settlement can be a
source of urgently needed funds.
Life settlements are an excellent option for retirees
looking to further supplement their lifestyle. Life insurance premiums are
often one of the first expenses that are cut when retirement budgets are being
planned and gone over. Rather than surrendering your policy for little to no value,
consider a life settlement and further supplement your retirement. You may even
qualify to keep part of your Life insurance without paying any further premiums
In 2017, estate tax exemptions were increased to $5.5
million.In 2018, they skyrocketed to
$11.18 million for singles and $22.4 million for married couples. This means
that policy owners who purchased life insurance as a way to protect their
assets from potential estate taxes no longer need the coverage
Interest rates have reached historic lows in 2021, this means that carriers are
unable to make the same amount of money they used to from investments.
Recently, many carriers have increased their COI (cost of insurance) to
customers. Best way to avoid these COI charges, is to sell your policies.
As previously mentioned, A 2021 report from the London
Business School estimates that life settlements are now paying policyowners 4
times more on average than the cash surrender value. This means that a
policy worth $45,000 is often worth nearly $200,000 in the life settlement
market.
At Abacus Life, we empower you with the
information you need to decide if selling your life insurance policy, or a
portion of it, is right for you. We understand that you, like many other
Individuals, may have a policy that no longer meets its goals. We are dedicated
to helping you learn the facts about your life insurance options so you can
make an informed decision and get the most out of your policy. We are committed
to serving you with the confidentiality, transparency, and
urgency you deserve.
See if you qualify to sell your life insurance policy by
filling out our simple
online calculator or call to speak with a settlement specialist
at 1-800-561-4148.
