Life insurance settlements are big business, but are they right for you? Before you sign on the dotted line, ask yourself these 3 questions to see if you’re making the right decision:

1.Am I making enough to pay off my debts?

Lots of people enter into life insurance settlements because they have a ton of debts building up, and they don’t have any way to pay them off. So, they use life settlements as an investment, to get some cash in-hand, so that they can pay their bills. This is usually the case in senior life settlements – where the policyholder is living on a fixed income and has mounting medical expenses.

While every life settlement will give you cash upfront for the rights to your life insurance policy, it doesn’t mean that you’re always guaranteed a fair offer. The money paid out in life insurance settlements can vary from situation to situation. Your age, your current health status, and even the investor you’re dealing with will all determine the amount of money you’re offered. That’s why it’s so important that you’re happy with the amount.

Bottom line – if the money offered to you during a life settlement isn’t enough to pay off your debts (or, at the very least, pay off a big chunk of them), you’re entering into the wrong deal.

2. Is this worth giving up my life insurance policy?

Remember, doing life insurance settlements means completely giving up the rights to your life insurance policy. Since your heirs aren’t going to get a payout when you die, you need to make sure that your life settlements are an investment that’s really worth it.
Again, this is especially true for senior life settlements. By the time you’re a senior citizen, you’ve been paying life insurance premiums for years and years. So, only give up your policy for a deal that’s truly worth it!

3.Will my heirs need any money from me after I’m gone?

If you’re going to leave behind a bunch of heirs when you die, you need to make sure that giving up your life insurance policy isn’t going to be too much of a hardship on them. After all, you’re probably going to spend most of the money you make in life insurance settlements, so there won’t be much – if anything – to hand over to your heirs after you’re gone.

Will they be able to pay your final expenses without going into debt themselves? Will they need your life insurance payout to make ends meet? If the answer to either of these is “no”, you’ll need to think twice about doing a life settlement.