Economic downturns are inevitable. Stock market volatility and other effects of a recession negatively impact retirement plans and retirement income.
Like many senior citizens in retirement, you’re probably thinking about how to weather this current storm cause by the Coronavirus, or COVID-19.
The good news is that you might have an asset in your file drawer that you didn’t even realize you can tap into. Your life insurance policy. For many retirees, selling their life insurance policy will generate much-needed cash that can be used during these unexpected times. This is a life settlement.
“While it’s always best to consult your financial advisor, there are times when a life settlement might be the best solution to meet your needs during a recession,” says Michael Freedman, CEO of Lighthouse Life.
A life settlement is a transaction that allows you to sell some or all of your existing life insurance policy for cash. In fact, because the overwhelming majority of policies are lapsed or surrendered before they pay a death benefit, selling a life policy frequently makes good sense, especially as a way to get much-needed financial relief during this stressful time.
Here is a 3-step guide to help you determine if a life settlement is the right choice for you during this economic downturn.
- Have you assessed your financial needs and goals?
- Do you need cash?
- Do you want or need your life insurance policy?
Assess Your Financial Needs and Goals
During an economic downturn, you’ll likely experience changes in your financial needs and goals. Are you still working part-time? Do you have enough savings for retirement? Has anything changed with your investments?
Now is the time to look at your retirement plan and determine if you need to make any modifications. For example, if you’ve lost income or assets, or are dealing with unexpected expenses or higher medical bills, you may need to adjust your plan. Speak with a financial professional to understand if you should make any changes to support your near- and long-term goals.
Determine If You Need Cash
Once you’ve reviewed your financial goals, you might determine that you need cash, either to meet current needs or to continue to invest in your retirement. Sometimes having more money in your bank account might be a better option than an investment you can’t access.
There are many ways to transform assets and investments into cash during a recession. As you explore your options, remember that a life settlement can be a safe and secure way to rapidly improve your financial situation.
A life settlement lets you convert your life insurance policy into cash quickly. In most cases, you can get an appraisal within days and, if qualified, can receive the funds from the sale of your policy in a matter of weeks.
Do You Want or Need Your Life Insurance Policy?
You’ve assessed your financial situation and determined you want to put more money in the bank. Before you can think about selling your policy, consider if you want or need to keep your life insurance policy.
To assess if you still need your life insurance policy, ask yourself the following questions:
- Do I need the insurance for my beneficiaries or my business?
- Can I continue to afford the premiums?
- Do I have other assets that I can sell?
If you’ve answered no to one or more of these questions, you might be paying for a life insurance policy that is no longer serving your needs and it may make sense to sell the policy now.
What You Can Do with a Life Settlement
One of the best things about a life settlement is that you can use the cash however you want. There are no limitations to how you can spend the proceeds from the sale of your policy, and this is especially important during economic downturns.
For many seniors, having sufficient money in the bank is important, especially during a financial crisis. You can use the funds for meeting immediate retirement expenses or invest the money to generate retirement income. You can use the funds from a life settlement to cover healthcare costs or pay for unexpected expenses that might arise during a crisis. Or you can do something else with the funds entirely. The bottom line is the money is yours, and you are free to choose what you do with it.
As you think about retirement planning during an economic crisis, it’s a good idea to assess your current financial goals and consider if you need your life insurance policy. A life settlement is a way seniors can get economic relief and weather financial storms.
Get started now to see if you qualify for a life settlement.
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