30- second summary of how life settlements can help generate income during recessions
Did you know that your life insurance policy is considered personal property, and you have the right to sell it? If you own your policy, it’s no different than owning any other type of asset – it’s yours to maintain or dispose of as you see fit.
Unfortunately, many people don’t know that and let their policy lapse in exchange for no value when they no longer need it or can no longer afford it. By selling your whole or universal life policy (and in some cases, even your term life policy), called a “life settlement,” you can receive cash for your policy that can be used for any purpose you like.
In this article, we’ll provide some ideas on how the money you receive from a life settlement can help generate income for you during this period of rapidly rising inflation.
If your fixed income is buying you less and concerning you more, contact us, and one of our experienced life settlement specialists will be happy to help you.
If you’re concerned about inflation taking a bite out of your retirement income, you’re not alone. According to the National Council on Aging, over 21 million Americans aged 65+ are “economically insecure.” With the current annual inflation rate being over 8%, it’s understandable why.
If you own a whole, universal, or term life insurance policy that you no longer need or can no longer afford, you might be able to sell your policy for a lump sum cash settlement, called a “life settlement.”
Selling a life insurance policy was ruled favorably upon by the Supreme Court over 100 years ago, and today life settlements are regulated by insurance commissioners in 43 states and the territory of Puerto Rico.
What would you do if you received a substantial amount of money for selling your life insurance policy? While you might be tempted to spend it on a cruise or a luxury you’ve always dreamed of having, you could use that money to generate additional income to supplement Social Security, a company retirement plan, or both.
5 ways a life settlement can generate income for you
You’ve probably heard there are two ways to earn an income: either by going to work or putting your money to work for you. When you sell your life insurance policy, you can put those funds immediately to work for you generating income.
Lighthouse Life is not an investment advisor, and is providing this information for informational purposes only. Please be sure to speak with a financial professional to determine the best way to manage your money.
Here are five ways you can do that:
- Treasury inflation-protected securities (TIPS)
Treasury bills have always been good short-term investment options that yield an income to the owner. TIPS are a type of T-Bill worth considering because they pay interest every six months over the span of 5 to 30 years. They are not considered “high-risk,” and you get a consistent, guaranteed payment from the U.S. government.
- Dividend-paying stocks
Well-established companies will usually pay dividends to shareholders. Consider dividend-paying stocks if you’d like a consistent or steady income source.
According to Fidelity Investments, dividend-paying stocks allow shareholders to receive income even when the stock market isn’t doing well. Most dividend-paying companies have been around for decades, and you can check their dividend payment history before investing.
- Fixed annuities
Fixed annuities are sold by insurance companies and are considered a safe investment category for seniors. They are contracts, or financial products, that pay you a guaranteed monthly income for a set period of time. Many seniors enjoy peace of mind with annuities knowing their monthly check is guaranteed and paid by a financially stable, A+ rated insurance company.
- Money Market accounts
Money market accounts essentially operate as a type of savings account, but they may offer higher interest rates and incentives based on the amount of money you deposit. In addition, you can easily withdraw funds for emergencies, and they’re FDIC-insured.
- Certificates of Deposit (CDs)
CDs are one of the safest investment options you’ll find because you can put away a fixed amount of money and receive a guaranteed rate of return that will be paid to you when your CD matures (6 months, 12 months, etc.). In addition, the rates are fixed, not variable, so you’ll know what your interest rate will be for as long as you hold the CD. This gives many seniors peace of mind.
Explore a life settlement today
If you are interested in learning how to cash-in a life insurance policy and receive additional income, it may be time to explore a life settlement. Use our calculator to find out how much cash you can generate from selling your life insurance policy.
