Growing number of seniors cashing in life insurance

Life Settlements
by Jacqueline Lee and Scott Morrow

Thousands of baby boomers are now turning 65 every day, and numerous studies show that the entire generation is generally unready for their retirement. With many realizing that their post-career income is likely to fall well short of the expectations, possibly due to financial hardships suffered during the recent recession, some are now cashing in their life insurance to buoy themselves, according to a report from the Pittsburgh Tribune Review.

Many of the companies that buy life insurance settlements from older Americans generally tend to target those policies with significant value, often in the neighborhood of $1 million or more, and typically held by those of an advanced age, usually older than 80, the report said. In these cases, selling a policy might be even more tempting because, as a result of rising medical costs and a greater need for care, many older retirees might need the cash injection more than those who only recently retired, or are approaching the date at which they will do so.

In general, experts recommend that seniors plan to have about 75-80 percent of their final pre-retirement income set to come to them annually after they stop working, as a means of covering their various expenses while taking into account a small cost of living decrease.