Life Settlement Proceeds
The sale of the policy allows the policy owner to realign their assets and cash flow. They are doing so, by taking a formerly illiquid asset and turning it into cash for other purposes.
Purposes such as:
� Unexpected medical expenses
� Long term care expenses
� Replacement of older expensive policies with new less expensive policies
� Charitable gifts made while your are alive to see your money put to use
� Educational expenses for the grand children
� Second homes
� Vacations
� Celebrations
� Or whatever you find of value
Now instead of simply surrendering the policy to the insurance company, the policy owner can sell it for much more. In the case of Term Insurance that has no cash value, hence no surrender value, now there is value where there was none.
It should be noted that surrendering a policy for the cash surrender value is, in effect, the same as selling the policy back to the issuing insurance company. The Life Settlement industry has created a secondary market and therefore competition for policies. Most people are not aware that many of the institutional investors who purchase these policies are, in fact, insurance companies along with pension funds and hedge funds etc.
