How Life Settlements Can Help Retirees Generate Income and Weather Financial Storms

Did you know that your life insurance policy is considered personal property and you have the right to sell it? If you own your policy, it’s no different than owning any other type of asset – it’s yours to maintain or dispose of as you see fit. Unfortunately, many people don’t know that and let their policy lapse in exchange for no value when they no longer need it or can no longer afford it. By selling your whole or universal life policy (and in some cases even your term life policy) in a “life settlement,” you can receive cash for your policy that can be used for any purpose you like.

With the current annual inflation rate over 8% as of this writing, many retirees are finding it challenging to make ends meet. According to the National Council on Aging, 17 million Americans aged 65+ are “economically insecure.” Selling a life insurance policy was enshrined as a right by the Supreme Court over 100 years ago, and today life settlements are regulated by insurance commissioners in 43 states and the territory of Puerto Rico.

5 Ways a Life Settlement Can Generate Income

When you sell your life insurance policy, you can put those funds immediately to work for you, generating income. Here are five examples:

1. Treasury Inflation-Protected Securities (TIPS): TIPS pay interest every six months over the span of 5 to 30 years. They are not considered “high-risk,” and you get a consistent guaranteed payment from the U.S. government.
2. Dividend-Paying Stocks: Well-established companies usually pay dividends to shareholders. These stocks can provide a consistent income source, even when the stock market isn’t doing well.
3. Fixed Annuities: Sold by insurance companies, fixed annuities are contracts that pay you a guaranteed monthly income for a set period of time, providing peace of mind with a stable income.
4. Money Market Accounts: These accounts operate as a type of savings account but often offer higher interest rates and incentives. They are FDIC-insured and allow easy access to funds for emergencies.
5. Certificates of Deposit (CDs): CDs are a safe investment option where you can receive a guaranteed rate of return when your CD matures, providing a predictable income stream.

As with any large financial decision or investment, be sure to seek the advice of a financial professional if you have any questions.

How Life Settlements Can Help During Economic Downturns

Economic downturns are inevitable and can negatively impact retirement plans and income. Many retirees may find themselves thinking about how to weather financial storms caused by events like the COVID-19 pandemic or a recession. The good news is that your life insurance policy might be an asset you can tap into during these unexpected times.

3-Step Guide to Determine If a Life Settlement Is Right for You

1. Assess Your Financial Needs and Goals: Evaluate your current financial situation and determine if you need to make any changes to support your near- and long-term goals. Speak with a financial professional to understand your options.
2. Determine If You Need Additional Liquidity: Sometimes, having more liquid cash might be a better option than an investment you can’t access. A life settlement can quickly convert your life insurance policy into cash.
3. Decide If You Want or Need Your Life Insurance Policy: Consider if you still need your life insurance policy for your beneficiaries or business, if you can afford the premiums, and if you have other assets you can sell. If you answer no to these questions, selling your policy may make sense.

Benefits of Life Settlements During High Inflation

With consumer prices up 9.1% over the last year, the largest increase in 40 years, many seniors are turning to life settlements to help them maintain their standard of living. Life settlements help in three main ways:

1. Increases Income: The lump sum payment from a life settlement can supplement Social Security and other retirement income, helping to pay down existing debt and cover future expenses.
2. Lowers Expenses: By selling their life insurance policy, policy owners eliminate the premium payment, freeing up money for monthly living expenses or special purposes.
3. Replenishes Your Nest Egg: A life settlement can replenish savings, purchase income-producing assets, and provide a secure feeling of having enough money in reserve for emergencies.

Explore a Life Settlement Today

If inflation is taking a bite out of your lifestyle or you’re concerned about the current economic climate, it may be time to explore a life settlement. Complete our short form today and see if you qualify for a life settlement through Lighthouse Life. We’re here to answer all your questions about life settlements and help you live comfortably despite rising inflation and economic uncertainty. Contact us to learn how selling your universal or whole life insurance policy can help you.