Every year, roughly 250k seniors are missing out on the opportunity to cash in on an estimated $51,300 each by selling their life insurance policies via a life settlement.
When you add it all up that’s $13 Billion dollars that seniors are missing out on each and every year because they don’t know that they can sell their life insurance policies.
A huge sum regardless, the figure is even more astounding when considering that the average American has retirement savings of $201,300 –– meaning a life settlement could potentially increase the average retirement savings, for people who surrender their policies, by more than 25%.
The sad truth is that people at risk of lapsing their policies likely have below average retirement savings, making the proceeds from a life settlement that much more critical in helping them meet their daily needs.
And these figures only include lapse numbers for universal and variable life insurance which are the most common for a life settlement. When you add in other types of life insurance that can also be sold, the combined result is that an even more staggering $22 billion of fair market value gets wiped out each year.
So why do tens of billions get left on the table each year? The answer is lack of awareness.
“For a transaction that can truly impact an individual’s financial well-being”, says Cyndi Poveda, our President of Life Settlements at Mason Finance and 20 year industry veteran, “Life settlements have historically remained stubbornly under the radar for many financial advisors and nearly all consumers.”
The secondary market for selling life insurance policies grew in 2017. The number of policies transacted was up 19% and the amount paid to policyholders increased by 25% compared to 2016, according to the newest report by The Deal.
Despite large growth in the secondary market for life settlements, many life insurance owners still don’t know their options – the life settlement market is capturing only 2,000 policies out of 250,000+ that were eligible but ultimately lapsed.
The individual implications can be massive. Whether it’s boosting a retirement fund, paying down medical bills, or planning for long term care, the money from a life settlement is life changing.
With 4 million baby boomers retiring annually, awareness around life settlements needs to increase dramatically to help more people get the most out of their existing life insurance policies.
“Growth in the number of households entering retirement has lead to an increase in companies offering specialized financial services for this demographic.” says Cyndi. “This has benefitted life settlement awareness, and at the same time the industry is increasing direct advertising to consumers and many companies provide online resources for consumers.”
If you’re currently unaware about what your life settlement options are, be sure to check out the industry association website, LISA, your state’s department of insurance, or our informational resources at Mason. You can find out how much your policy could be worth in less than a minute.