A life settlement is a financial transaction in which you sell your life insurance policy to a third party for a price higher than the cash surrender value offered by the insurance company. The purchaser becomes the new beneficiary of the policy and is responsible for all subsequent premium payments. The two main advantages of a life settlement are that you are freed from the obligation to pay the premium and you receive a lump sum payment. When you sell your life insurance policy, you no longer have to pay the premium. After you retire, life insurance policy premium can be a strain on your limited finances. Life settlement can get you cash on your life insurance policy even before death. You usually receive a much higher surrender value than what the issuing insurance company attaches to the policy. There are no restrictions on the use of this money. You can use it for any purpose – to go on a vacation, to buy expensive gift for a loved one, etc.

When should you consider a life settlement? It comes down to changes in your life. These changes could be at
• individual level - cashneed for major expenses, outlived need for coverage, needing different coverage or features, financial distress
• family level - hange in beneficiaries (e.g., divorce, death of dependents), Second-to-die policyholder (i.e., spouse) has passed away, material change in the value of estate
• business level - change in key executives / partners, change in succession plan (e.g., family business) or needing cash / seeking to monetize assets

You might also be attracted towards life settlements in the following circumstance:
• Your insurance and/or estate needs have changed, making your current policy(s) inadequate or exceedingly adequate for your current or future needs
• You are not satisfied with the performance of the insurance product(s) you have chosen, or are aware of newer, better performing insurance products
• You want to cash the value of their policy(s) now, rather than continuing to pay on a policy you will never receive the benefits of
• You wish to live out the remaining years of life without a change in lifestyle
• You need capital to pay for medical treatments or procedures
• You realize that there is now a greater tangible asset value to your life insurance policy, and wishes to take advantage of this added value.

Whatever be your situation and needs, never enter a life settlement without proper advice and assistance. If you sell your life insurance policy, you could be subject to tax liabilities.