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A life settlement or senior settlement, also known as a viatical settlement, is the transfer of a life insurance policy from the policyholder to a licensed life settlement funder. This is an option for an individual who no longer wants or can afford his or her life insurance plan and would prefer to receive some money for it now. In exchange for rights to the future insurance payout upon the former policyholder's death, a life settlement company pays a lump sum to the policy holder and takes over all future payments.
A policyholder can receive significantly more money through a life settlement than through a policy cash surrender to the insurance company. Yet the payout from either of these options is much smaller than the value of the death benefit. Before opting for a settlement, it is important to shop around in order to receive a fair cash payout for your insurance policy.
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