Life settlements are being forfeited every year
United States residents over the age of 65 are losing out on a collective $112 billion in life insurance settlements every year, according to a new report from the Life Insurance Settlement Association. The report notes that consumers are losing out on life insurance benefits because of lapsed coverage or because they choose to surrender their coverage. The organization suggests that the potential size of the life settlement market in the United States is “simply astounding.”
Report shows that a typical life insurance policy can be sold for more than $100,000
The report suggests that tens of thousands of seniors are forfeiting their life insurance settlements, which could be used to cover various costs. A life settlement is the sale of an insurance policy to a third party. The policyholder transfers ownership of a policy to the third party in exchange for a payout. According to the report, those cashing out their life insurance policies are typically over the age of 70 and their policies often have a value of more than $100,000.
More than 250,000 life insurance policies lapse every year in the US
According to the report, approximately 250,000 life insurance policies lapse or are surrendered every year. Based on public information, less than 1% of the total life settlement market is being served by the insurance industry. This represents a major opportunity for growth, according to John Wlecom, founder and CEO of Welcome Funds. The report suggests that many of those that allow their life insurance policies to lapse are not aware that they can sell their policies for immediate cash payouts.
Majority of seniors are not aware that they can take advantage of life settlements
There are many reasons why seniors may want to sell their life insurance policies. Some of these reasons include simply not wanting life insurance coverage any longer, or premiums becoming too expensive to afford. One of the greater challenges that the insurance industry is facing currently is raising awareness concerning life settlements. According to the report from the Life Insurance Settlement Association, 90% of seniors do not know that they can sell their life insurance policies.
