Life Settlements: From The 80s Till Now
Senior life settlement has a relatively short history, but today it’s known to almost everyone.
It’s when the holder of a life insurance policy sells his policy to a third party (investor), getting an amount that is less than the face value and more than the life insurance cash value (usually about 10-20 percent of the face amount). And the investor becomes the holder of the policy, begins to pay the cash value and after the previous policyholder’s death receives the death benefits.
The history of senior life settlements began in the end of 80s, when the AIDS epidemic was spreading throughout the US. Some of the people who suffered from AIDS had life insurance policies. They didn’t need them any more (since they wouldn’t get any money while they were still alive), and they were in need of money for the medicines and expensive treatment. So, they realized they could sell their life insurance policies, and it was profitable for both sides: the seller of the policy got some cash he could spend for his treatment and the buyer would receive the benefits quite soon.
Today every person who is 65 or older can get a senior life settlement. Since nowadays only about 10-20 percent of all life insurance policies are being payed, in many cases for the policyholder it is more advantageous to sell his policy, being able to spend the life insurance settlements funds on whatever he wants. For instance, he can use it for treatment if he has any illnesses, he can make a new investment, or he can go traveling.
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