The Hidden Financial Asset Most Retirees Don’t Know They Have

Even seniors who have planned carefully often find that the costs of retirement add up, forcing some retirees to cut corners severely on everything from health care to travel to legacy expenditures like helping with college tuition for grandchildren. Everyone over the age of 65 wants the freedom to create a retirement that meets their needs and those of their loved ones, but to fulfill those hopes they might need to tap into a little-known resource that could turn a dead-end account into an asset.

Life insurance is property and therefore can be sold in a transaction known as a life settlement, but 90 percent of seniors let their policies lapse instead. Instead of lapsing a policy, seniors should first find out how much value their policy holds. A quick example of the hidden value within a life insurance policy: a 73-year-old man who chose to sell his policy learned that his $5 million policy would yield $1.55 million through a life settlement. If had surrendered the same policy back to the insurance company, he would have received just $210,000.

Six Facts About the hidden value of your life insurance policy:

1. Even though the life settlement industry has been around for more than 25 years, many seniors don’t know that they have the option of selling their policy because insurance companies haven’t been obligated to tell them about it. Thanks to state regulations, that’s changing.

2. This year alone, Americans are expected to make $3 billion in life settlements, putting money to work that would otherwise be lost if the policy was allowed to lapse.

3. The amount of a life insurance payout is directly related to two factors: the policy holder’s overall health and the cost of the original policy. A life settlement calculator can help a policy owner determine if their life insurance has any value.

4. The cash from the sale of a life insurance policy can be used to help fund long-term care, medical treatments, travel or family activities.

5. The life settlement industry is regulated by each state’s department of insurance, and eight states, with two more pending, have recently passed laws requiring insurance companies to disclose the life settlement option to their policy holders.

6. Seniors wishing to explore life settlements can start by calculating the payout value of their policy with Magna’s Life Settlement Calculator. The potential to turn a no-longer-needed insurance policy into much-needed cash might surprise you.

If you or a loved one is nearing retirement age or already navigating life through the senior years, it’s crucial to know the options surrounding old insurance policies. Life settlement companies like Magna stand ready to answer your questions and help you decide if selling a life insurance policy is right for you as you seek to optimize your retirement years.