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Cashflow Quandry: Are Senior Settlements A Smart Idea?

February 3, 2014 By Vernessa Taylor | CoachNotes Blog 15 Comments

It’s never too early to consider the options available for funding retirement whether you’re a part-time blogger, a work-at-home-mom, or a small business owner.

Table of Contents

  • Financial Priorities and Economic Realities
  • Here’s the question: Is life insurance settlement for seniors a smart cashflow strategy to pursue?
    • Ask the right questions
  • Consider the Option
    • Vernessa Taylor | CoachNotes Blog
    • Latest posts by Vernessa Taylor | CoachNotes Blog (see all)

Financial Priorities and Economic Realities

Taking steps for financial security
Taking steps for financial security

Whether you are a professional in industry, small business owner, part-time blogger, or stay-at-home mom, priorities and goals are apt to change over time.

How we manage our finances and how we spend our hard-earned dollars tends to shift in line with those goals and priorities. At this point in life, many of us are thinking about (or wish we were thinking about) what is often called “the Golden Years.”

Retirement may be close at hand for some (or way over the horizon for others).

Whatever our present circumstances and no matter the differences in age, the economics of our times is on our minds.

And the truth of the matter is, the state of the economy as we’ve witnessed it over the last couple of decades has us worried that retirement — as we’d like to envision it — might not really be in our future.

It’s never too early to consider the options available for funding retirement whether you’re a part-time blogger, a work-at-home-mom, or a small business owner. Senior settlements, a financial service from the insurance industry, could contribute to retirement cash flow.

Information is power

Forewarned is forearmed, and with that in mind here is a bit of information that could make the difference between being liquid and experiencing a cash flow quandry.

Whereas the information might not benefit you personally at this time in your life, it might make the difference for parents, grandparents, godparents, church members, retirement bloggers, business partners or investors — anyone who might seek your opinion or look to you to share world-changing information because you are “out there on the internet!”

Here’s the question: Is life insurance settlement for seniors a smart cashflow strategy to pursue?

The definition of settlement according to the dictionary at Investopedia.com is “the selling of one’s life insurance policy to a third party for a one time cash payment.”

The idea of settlement in this context is not about a legal proceeding; instead, it applies to insurance policies held by seniors, whether retired, an executive (or regular employee) on the work force, homemaker, disabled, or a business owner.

Investopedia.com sheds some further light as to when or why senior settlement comes into play:

  • Life settlements are usually only done when the insured person doesn’t have a known life-threatening illness.
  • They are often done with “key individual” insurance policies held by companies on executives who no longer work there, thus the company can stop paying premiums and cash out the policy.
  • Sometimes people outgrow their need for a specific life insurance policy, and settlements may offer the chance to gain more than the policy’s cash surrender value.

Ask the right questions

There are many articles that answer common questions. In an effort to educate the community about settlements, New Retirement, shared the following quote in their article, Convert Your Life Insurance Policy into Cash with a Life Settlement to Help Fund Retirement Expenses:

Until recently, people with unwanted life insurance would either let their policy lapse or surrender the policy back to the insurer for the cash surrender value. However, Life Insurance Settlements — also known as Life Settlements or Senior Life Settlements — are a new type of financial service being popularized by specialized brokerages. These brokerages sell your life insurance policy to institutional investors for typically three to five times the cash surrender value of the policy. — New Retirement

Consider the Option

Although life settlements are a viable financial service that should be considered as part of a retirement portfolio, oftentimes insurance companies will not inform long-time policy holders of their availability. But with libraries of information available, like those mentioned above, more and more individuals are looking to the life settlement industry for new opportunities and financial solutions to help ensure the golden years can be enjoyed.

We can see that for a variety of reasons, senior settlements could be good options for some seniors. Just like with any other financial investment strategy, this type of financial solution should be given careful consideration and discussed with family, business partners and a financial advisor before making any moves.

What’s your take on this? Use the comment area to share your thoughts with us.

Image(s): Gratisography and Bell’s Design.

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Vernessa Taylor | CoachNotes Blog

Technology Consultant at Local Business Coach Online
Vernessa Taylor is a micro and small business champion -- helping professionals, solopreneurs and consultants choose and use automation and smart technologies to build and manage their businesses. A techie with a quirky sense of humor, she writes serious stuff at CoachNotes Blog. Connect with her on Google+ and Twitter.
My Twitter profileMy Google+ profileMy LinkedIn profile

Latest posts by Vernessa Taylor | CoachNotes Blog (see all)

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Filed Under: Small Business Advice Tagged With: life settlements

Comments

  1. Donald Quixote says

    March 21, 2014 at 7:27 pm

    This is a very interesting topic. I can see the benefit if their are things within your insurance that you don’t need to consider selling, however you never know when things will change and the need for that specific coverage will present itself.

    Reply
  2. Chad says

    March 19, 2014 at 3:30 am

    This was a very helpful post about senior settlement and I also liked the way how you used different sources for information using the internet. It’s true that we can source many information this day using the internet. I believe that almost anything can be easily learned by browsing the web about tips, tricks and other information.

    Reply
  3. andy says

    February 11, 2014 at 9:30 am

    Forewarned is forearmed, and with that in mind here is a bit of information that could make the difference between being liquid and experiencing a cash flow quandry.

    Reply
  4. andy says

    February 11, 2014 at 9:26 am

    Whether you are a professional in industry, small business owner, part-time blogger, or stay-at-home mom, priorities and goals are apt to change over time.

    Reply
  5. Sagar says

    February 7, 2014 at 2:08 pm

    Very thought provoking article.After reading this post automatically we think of what or how would be our future linking it to our present living style. My aim is to earn lot of money not because i am greedy but for a fact that money is essential in life. Our future totally depends on our present. So it would be wise if we prepare for our future by investing or joining a retirement plan.So senior settlements are a smart idea !!!!Thank you for sharing this article
    Sagar would love you to read ..How to reach Linkedin Members who are outside your NetworkMy Profile

    Reply
  6. Alex says

    February 6, 2014 at 5:39 pm

    I didn’t even know this was possible to do.

    But your right, planning is everything, and without a solid foundation of where the US will be tomorrow, people need to have plans like this.
    Alex would love you to read ..5 Tips to Score a Cheap ForesclosureMy Profile

    Reply
  7. Gail Gardner says

    February 4, 2014 at 8:17 pm

    Don’t feel bad, Kaloyan. Even those of us who worked for the same corporation for decades rarely collect pensions. Those are carrots corporations dangle with no intention of ever paying out when the time comes. Very similar to insurance companies.
    Gail Gardner would love you to read ..WANTED: Bloggers Interested in Collaborating to Increase Their IncomesMy Profile

    Reply
  8. videojeeves says

    February 4, 2014 at 1:01 pm

    Hello Vernessa Taylor,
    Well, life insurance is essential for better life because it play a big role for supporting the families. whatever the policies are behind the life insurance is, it is the best plan for life.

    Reply
    • Vernessa Taylor says

      February 4, 2014 at 11:20 pm

      Welcome, videojeeves. So long as we deal with ethical insurance companies who pay out benefits when the time comes to do so, having insurance can help the families left behind. The good thing about the idea of life settlements is that those who paid the premiums for so many years get to benefit from their investment while they’re still with us.

      Reply
  9. AmyColon says

    February 4, 2014 at 12:29 pm

    Thanks for sharing knowledgeable post….:D,I found it interesting,Your article makes me to think about many issues that may arose in future so have to plan many things,Thanks for giving me an idea about such issues…….:)
    AmyColon would love you to read ..BEN 10^ ULTIMATE CRISISMy Profile

    Reply
  10. Vernessa Taylor says

    February 4, 2014 at 5:28 am

    LOL, well that sounds like a plan, Kaloyan! I think in finance terms, that’s called self-insured. 🙂
    Vernessa Taylor would love you to read ..Cashflow Quandry: Are Senior Settlements A Smart Idea?My Profile

    Reply
  11. Ruchi Dobhal says

    February 4, 2014 at 9:40 am

    Thanx Vernessa for giving a direction to make our future financially safe and sound and also independent..

    Reply
    • Vernessa Taylor says

      February 4, 2014 at 11:17 pm

      Appreciate your comment Ruchi.

      Reply
  12. Bhavesh Patel says

    February 4, 2014 at 9:07 am

    Hey Vernessa,

    You picked up a nice subject for write. Generally people are more looking this kind of information more. Thanks for sharing this information with us.

    Reply
    • Vernessa Taylor says

      February 4, 2014 at 11:16 pm

      Thanks for your comment, Bhavesh. Information is power 🙂 and it is good to at least know the options just in case we can be a resource for someone who needs this information.

      Reply

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