A life insurance settlement is a process where the investors buy the life insurance policy which is in force, for less than the face value of the policy. The investor assumes full responsibility to pay the premiums and he is entitled to the death benefits of the insured person. In the past few years, a secondary market has emerged for life insurance, where American seniors can opt to sell their policies to third parties for cash payments. In other words, owning a life insurance policy is an investment that can be cashed by the policy holder in his lifetime rather than the benefits going to the beneficiaries after his death.

Only people over the age of seventy are able to sell their life insurance policies. The investor will purchase a life insurance policy from only those people whose life expectancy is less than twenty years. A life insurance settlement is a win-win situation for both the parties. The senior citizen might not be able to finance the premiums of the policy and by selling it, can make use of the cash he receives to settle immediate expenses like medical bills or go on a vacation. The investor on the other hand, receives a good return on the investment and also benefits from the settlement paid out at the death of the insured.

Life insurance settlement is a very profitable alternative for seniors to exit from a life insurance policy that they no longer want.