Making your money last with longer retirements is challenging.  Several years ago I had first heard about converting life insurance policies to cash before you die. It was usually in the context of a medical crisis that would allow a special breaking into the bank of a policy’s payout for final medical expenses.  Now there are several companies who are building their business model around what is referred to as life settlement.  I am not approaching this as a scam.  People can “find” money for long term care or a way to let you live out that bucket list.

So another cottage industry is growing around the fields of aging consumers. Many of us took out midlife life insurance policies that were meant as a back up to survivors raising children. It is something you never wanted to use obviously, put it gave a certain sense of security for ‘what if’ situations.  If you have kept up those payments on a whole, universal  or simple term life and do not have a partner as a beneficiary, this gives you another decision to be make. Many people just stop making payments or cash out the few thousand dollars on a policy that pays 20 to 30 times that face cash amount.  As always there are some strings attached and the who wins in the end may be tilted in favor of the business community.

When you get into the details of how you qualify for a “life settlement” payday, it sounds like a  ambulance/ cemetery grave chaser drama.  They may pay you up to 20-30 percent of the full value of your policy minus commissions.  They simply continue to make the payments as the designated beneficiary. Of course there is a selection process, if your parents lived late into life and you have healthy habits and no medical problems  looming – you will be rejected. That should be cause for celebration. They do not want to wait too long for their profit (5-7 years on average) .  Ghoulish yes, sound business practice and practical for some people – maybe.  Only 43 states regulate this practice so be very cautious as there are online companies that market to work directly with you. Consult with someone else before you consider this option.

I have two well selected policies that I have took out at age 49, both are written to age 92.  One will become too expensive(term)  when I turn 70  and the other has some cash value. I have not really looked into this as I am an optimist.   I still like to think any payout being there for those same children that I worried over through my mid life and their younger years.



the long read again the NYT: