OAKLAND, CA--(Marketwire - September 10, 2009) - Many older Americans have begun to explore the
possibility of selling their unneeded or unaffordable life insurance
policies for cash as a way to combat economic pressure caused by the
recession. In fact, life settlements provide an average of seven million
dollars a day to seniors in need.(1)
As life settlement grows in popularity, new legislation and financial
planning strategies have helped to make the practice even safer and more
transparent for customers. Despite this, many myths remain. To help dispel
some of these inaccuracies, Golden Gateway Financial, an online financial
resource for seniors, shares the truth behind some of the most common life
settlement myths.
"Life settlement is an important financial decision that involves a great
deal of emotion," Eric Bachman, founder and CEO of Golden Gateway
Financial. "It is also surrounded by many misconceptions, making it
critical that people learn the truth so they can make more educated
decisions about their policies and retirement."
Myth: Life settlement is only for the wealthy
Truth: Life settlement is widely available to anyone with a policy over
$50,000, regardless of income. The product is quickly growing in popularity
across a wide variety of population demographics. Moreover, the
application process is simple, with no new medical exams required.
Myth: It is better to take the cash surrender value on a policy
Truth: On average, a life settlement can provide up to 300 percent of the
cash surrender value of a policy(2). When you consider that 85 percent of
all life insurance policies never pay a death benefit(3), it is obvious
that most people aren't aware of this life settlement option or the
potential size of the cash payout.
Myth: Only whole life policies are eligible for life settlement
Truth: Life settlement is available for a wide variety of policies. The
most common policy types are universal life, convertible term, and whole
life, but settlements are also possible for some of the more specialized
types of life insurance such as survivorship and group insurance.
Myth: Policies are purchased and held by individual investors
Truth: Institutional investors such as international banks and pension
funds purchase the majority of life insurance policies. These providers
must first undergo substantial regulatory scrutiny in order to be licensed
to purchase life settlements.
Myth: Life settlement is only for the terminally ill
Truth: Life settlements are generally available to anyone over 65 years of
age with a universal, convertible term, or whole life insurance policy. It
is designed so that policyholders can get the most cash out of their policy
even when they can no longer maintain their premiums. A special type of
settlement, called a viatical settlement, is available to the terminally
ill, but the vast majority of settlements today are life settlements.
Myth: Life settlement is a highly unregulated industry
Truth: Thirty-four states currently have life settlement legislation;
another six have legislation pending; and eleven have legislation that
regulates settlements for the terminally ill. A recent New York Times
article highlighted the fact that Wall Street firms are working to
securitize life settlement as an investment opportunity. Securitization
would enhance the product's appeal to a broader range of institutional
investors.
For more information about life settlement or to access Golden Gateway
Financial's industry leading suite of online retirement assessment tools
and resources, please visit
http://www.goldengateway.com.
About Golden Gateway Financial
Golden Gateway Financial (
http://www.goldengateway.com), located in
Oakland, California, is a comprehensive resource for senior citizens, baby
boomers and soon-to-be retirees to assess their financial health at
retirement. Through a unique set of online tools and clear and unbiased
communication, the company helps individuals address "The Great American
Retirement Dilemma." The tools enable users to better assess the security
of their nest egg and to make intelligent choices to fully enjoy what
should be the best years of their lives. The company also operates the
industry's premier reverse mortgage and life settlement services with
innovative new calculators and products for each, and a team of trained
counselors to help seniors better understand the products and evaluate
whether they are right for them.
(1) The Basics of Life Settlements, Life Insurance Settlement Association
(LISA), 2008
(2) Data Collection Report 2006, Life Insurance Settlement
Association (LISA)
(3) Understanding Life Settlements and Industry Issues Entering 2008,
Insurance Studies Institute, 2008
Contact Information: Press Contact:
Michael Azzano
Cosmo PR for Golden Gateway Financial
415.596.1978