Insurance policies
act as an aid to protect ourselves against the uncertainties of our life. They act as a beam of light during the dark leap of time in our life. As their purpose is fulfilled then they just tend to be either surrendered or stand lapsed. When we realize about the usage of the insurance policies, most of them actually do not find much utility to their existence. It is at this stage that we think about the role of life settlement.
A life settlement is a financial transaction wherein the holder of the insurance policy sells the policy to a third party or any life settlement company for an amount which is more than the value which is offered by the life insurance company. Once the policy is sold to the third party then at this stage the owner of the policy becomes the purchaser and he becomes liable for the future payments of the premium and even the sole holder of the realization value of the policy on its maturity. Insurance policies are also considered as a valuable asset which does not lose much of their value over a period of time like all the other assets. The tool of life settlement relieves you from the burden of excessive burden of payments of premiums and in addition it helps you to provide a lump some amount of money.
Life settlements are considered as an important tool that has brought about a secondary market for the life insurance policies. The owners have got access to receive an amount which is more than the cash surrender value offered by the insurance companies. Thus there is a creation of a market which did not exist earlier. Initially before the existence of the life settlement companies, incase their had been an urgent requirement of money for the policy owners then in such scenario the owners will have to accept the surrender value offered by the insurance companies.
Some of the benefits which are offered by the life settlement to the users are that the people have gained an opportunity to sell their policy and get a lump some amount of money other wise the absence of the market would lead to the wastage of the policy. They have contributed to the creation of additional capital thereby they have enhanced the need and demand for the financial products and services. It is a win –win scenario with the life settlement policies. As far as the viatical settlement policies they act as one of the most important component acting as an essential help to the development of the terminally ill people.
Viatical settlements are meant for the terminally ill and chronic persons who are in need of money; these settlements are available only to the people who are above 65 years of age. In other words viatical settlements are given to persons who have a life expectancy of less than 4-5 years. The main benefit which viatical settlements offer to the users of the insurance policies is that they can be relieved from the monthly payments of premium. Further they get a huge amount of money and the income earned through this is tax free.
