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Why 2021 is an Important Year for Life Settlements


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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.


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About the author

a man wearing a suit and tie

Jay Jackson

CEO & President, Abacus Life

A highly experienced alternative asset manager and capital raise expert, Jay joined Abacus Life in 2016 as president & CEO. He has more than a decade's worth of financial sector experience, including fund development as well as directing portfolios and investor processes. Jay is an excellent leader focused on maximizing value, service and awareness as our company continues to grow.

You Can Follow him on LinkedIn @ www.linkedin.com/in/jay-jackson-731025135/

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