Top 3 Reasons Why Older Americans Are Selling Their Life Insurance for Cash
Americans have more choices than ever—about television shows, car services, or where to get their news, shop, and book travel. So it would follow that seniors seeking financial help during retirement should be informed about every viable option, including life settlements. This option, which can convert an unneeded life insurance policy into a windfall, is becoming better understood and more popular among the over-65 population. There are three primary reasons for this surge in life settlements:
Scarcity of retirement funding
Retirement funding is so vital that most young adults make decisions regarding their late-in-life income in their ‘20s or ‘30s, putting away money each month so that they can have stability during their golden years. Unfortunately, even those careful efforts often yield insufficient funds for the needs during retirement; one recent study showed that the number of Americans over 75 who filed for bankruptcy tripled from 1991 to 2016. More than 62 percent of the respondents in the study indicated that high medical costs were a key cause of the bankruptcy filing.
New tax laws
Several provisions in the March 2018 Tax Cuts and Jobs Act have made life settlements a more favorable option, including the doubling of the exemption for the estate tax (to $11.2 million per individual and $22.4 million per couple), the addition of a new tax credit for non-child dependents and the inclusion of premiums in the tax basis, which reduces tax rates on life settlements. The new tax code has allowed those who might not have previously qualified for a life settlement to reconsider their situation.
Better education about life settlements
According to research from the Insurance Studies Institute, more than 500,000 seniors lapse their life insurance policy annually, but ninety percent of seniors polled reported that they would have considered a life settlement if they had been made aware of the option. That statistic is likely to change, as life settlements gain a higher profile and financial advisors take seriously their fiduciary responsibility to make clients aware of the settlement opportunity.
Life settlements can convert an unprofitable life insurance policy into a valuable source of income for retirement, so seniors who might have had a change in circumstance in regard to their policy should investigate a life settlement. For a simple calculator that will allow you to assess your eligibility, visit Magna Life Settlements today.