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A: A Life Insurance Settlement is the sale of a life insurance policy to a third party. Sometimes called a "Life Settlement", a "Senior Settlement" or "Lifetime Settlement", the Life Insurance Settlement typically offers an insured more money than the cash surrender value of the policy, and offers the Life Insurance Settlement company an opportunity for substantial profits. The purchaser of the life insurance policy will assume any ongoing premiums and expenses, and will also receive the death benefit.
Unlike a Viatical Settlement, the insured does not need to be terminally ill. Life Insurance Settlements are typically offered to older policy holders, although high-value, long-term policies may be purchased from younger policy holders.
Life Insurance Settlements, offer an insured person no longer wanted, needed or could afford the opportunity to liquidate the policy for a value well-above the the cash surrender value (which is the value of the policy if the insured stopped paying premiums, or cancelled the policy).
Although the viatical industry is becoming increasingly regulated, the life insurance settlement industry remains unregulated in nearly all states. Scams and frauds are not uncommon and anyone considering a life insurance settlement should make certain to receive quotes from multiple companies and to carefully investigate the backgrounds of those companies.
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