Life Settlements: Why Seniors (even Celebrities) are Selling Their Life Insurance Policies

I don’t want to tell you how much insurance I carry with the Prudential, but all I can say is: when I go, they go too.” – Jack Benny, comedian (1894-1974).

An on-air penny-pincher who pretended that he would sooner die than part with a dollar, the real Jack Benny was a kind and generous man. Also an excellent planner, his widow was well-taken care of after his death and even received a daily red rose from the local florist, a provision arranged for in his will.

Ed McMahon, the former co-host to Johnny Carson on The Tonight Show, was another generous celebrity. Gifted with an optimistic personality and a hearty laugh, McMahon lacked Benny’s budgeting and strategizing skills. (Perhaps he took more after the Celebrity Sweepstakes Winners he helped create….) In spite of decades of career success, McMahon lost his health in 2007, then nearly lost his home to foreclosure in 2008 before passing away in 2009 at the age of 86.

While Donald Trump reportedly may have assisted the aging, ailing celebrity to stay in his home, the McMahons were also helped by another friend who told them about Life Settlements. As Pam McMahon (Ed’s widow) reports, they were previously unaware that they could sell a life insurance policy, thus using it as a liquid asset in a time of need.
Ed McMahon carried multiple life insurance policies, and the premiums became an unmanageable burden to them, especially when injuries prevented him from working.
According to a letter written by his widow Pam McMahon,Ed had more than one policy and they were able to sell one to ease their financial stress.

Interestingly enough, another well-known celebrity has chosen to endorse Life Settlements (and probably not because she needs a paycheck – this octogenarian is still red-hot in show business!) Actress Betty White has done commercials for a company in the Life Settlement industry and has gone on record stating that she “would encourage any senior who is considering letting their life insurance policy lapse to consider a life settlement.” (I can’t help but wonder if she is the friend who helped the McMahons with her advice….)

But there are many other reasons, besides financial stress, to consider selling a life insurance policy. The beneficiary may have passed away. The policyholder might simply wish to use the money differently, such as starting a business or sending a grandchild to a private college. The policy holder may have multiple policies and no longer need them all, or the policy may insure a “key man” in a business partnership who has retired.

Is selling your life insurance policy the only solution for seniors seeking cash? Absolutely not! Many seniors simply don’t qualify, and even if they do, it’s important to look at what option makes the best sense for your particular situation.

One advantage of a whole-life policy is that it gives you many options. For instance, the cash value can be used to pay up premiums so that no more premium payments are ever needed! Stay tuned and we’ll examine other ways to use your policy to obtain cash (while you’re still living) – withOUT having to sell your policy.

For more information on Life Settlements, we invite you to read about their history and rise as a new asset class, learn how they can help you truly diversity your portfolio, and watch a 19-minute video that explains this investment in greater detail.

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4 Responses to Life Settlements: Why Seniors (even Celebrities) are Selling Their Life Insurance Policies

  1. Ash Nagre says:

    I have a whole life and looking to sell it.

  2. Pingback: Too Old for Life Insurance? The Surprising Truth about Seniors and Life Insurance | Partners for ProsperityPartners for Prosperity

  3. ray miller says:

    I have a whole life policy and want to sell it.

  4. Kate4Kim@P4P says:

    Hi Ray, our best advice is to look for a private party or perhaps even a family member, although in certain situations there are life settlement companies that could be interested. Since the policy will be worth much more down the road than the cash value alone and there is a minimum guarantee, provided that any due premiums are paid, policies often have significantly more worth than their cash value alone, if you can find the right buyer.

    It could also be worth examining what you want/ need the money for… we are starting hear about situations in which (for instance) a whole life policy may help policyowners obtain the long-term care they need, with the institution named as the beneficiary (or one of the beneficiaries.)

    If a buyer is not located, consider investigating the possibility of keeping the policy without additional premiums needed. Contact your life insurance company to see if a natural vanish or reduced paid-up option will work for you. These options can keep your policy in place (and allow you future access to your cash value) without requiring additional premiums to be paid. Learn more about ways to keep a policy without making premium payments out of pocket.

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