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To put it simply, a life settlement is a financial transaction where a policyowner sells an existing life insurance policy for more than its cash surrender value but less than the total face value. While it may sound simple, the truth is that a life settlement is a complex financial tool allowing policyowners to access the market value of their life insurance policies.
The foundation of the life settlement industry was laid when the U.S. Supreme Court ruled in the 1911 case Grigsby v. Russell that life insurance is an asset that can be sold. At issue was a policy insuring the life of John C. Burchard. Having paid two premium payments with a third overdue, and being in need of a surgical procedure, Mr. Burchard was in dire need of money. Running out of options, he approached Dr. Grigsby who ultimately paid Mr. Burchard $100 for the policy and a promise to take over the premiums.
Mr. Burchard subsequently passed away a year after his surgery. When Dr. Grigsby attempted to claim the life insurance benefit, the life insurance carrier, Russell, denied the claim, stating that the transaction was invalid. Dissatisfied with this outcome, Dr. Grigsby took legal action to challenge the insurance company’s decision. After a lower court initially sided with the life insurance carrier, Dr. Grigsby appealed to the U.S. Supreme Court, who ultimately heard the case in 1911. Writing for the majority, Justice Oliver Wendell Holmes, Jr., stated that life insurance is a form of personal property that the policyowner can sell or transfer.
The Grigsby v. Russell decision confirmed that you have the right to sell your life insurance policy. This opened the door for what we now know as life settlements, where policyowners can sell their life insurance policy to a third party for a lump sum of cash. Understanding the ruling helps policyowners realize the value and potential financial benefits their life insurance policy can offer.
Your life insurance policy is an asset that can be sold, just like your home, automobile, or other personal property. As such, you can use the money you receive from selling your policy however you want. Policyowners who have contacted Ovid to sell their policy have used their payouts in a myriad of ways, from spending on necessities to taking the trip of a lifetime. Just imagine how you could use your money!
A sudden cash injection can help pay down your debt, fund medical care for you or a loved one, or take advantage of an investment opportunity.
Many people use their settlement to fund a dream vacation or to make memories with their family while they still can.
With a life settlement, you can help your family now while you’re around to share in the enjoyment that cash can bring those you love most.
There are no restrictions to how you use the money you receive from selling your life insurance. Let your imagination run wild!
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