With uncertainty in the stock market and the global economy as a whole, more and more people are looking for ways to build a solid “nest egg” that isn’t likely to crash anytime soon. If you do it correctly, a life insurance settlement can provide that kind of security for you. But first, you have to know how life settlements work.

A life settlement is an agreement between two people – an investor and a life insurance policyholder. The investor pays the policyholder a lump sum and, in return, gets the rights to the life insurance policy. From there, managing the policy is the investor’s responsibility; it’s up to him to make the monthly premium payments and do whatever else it takes to keep the policy active. Then, when the original policyholder dies, the investor gets the full payout of the life insurance policy.

How can this help you?

If you’re an investor, the benefits are obvious. All you have to do is invest some money in a lump sum payment and some premium payments, and you’ll wind up getting a large payout when it’s time to collect on the policy. Most investors will only handle senior life settlements – simply because odds are that they’ll get a payout much sooner than if they were to work with someone younger and healthier. Either way, investors know that they’re going to get their payout at some point; the global economy or the stock market has no bearing on it.

If you’re a life insurance policyholder, life settlements can be extremely beneficial for you, too. First and foremost, you’ll get out from under the obligation of monthly premium payments. For many people, life insurance premiums are too expensive to pay – especially after you retire and are living on a fixed income. And, unfortunately, you can’t just cancel your life insurance policy without paying a ton of expensive fees.

So, if you’ve got a life insurance policy, you’re stuck with it.

Second, a life settlement can provide you with some much-needed cash right now. You’ll get a lump sum payment from your investor, and, while it won’t be as much as the total value of your policy, you’ll be able to get it immediately. Lump sum payments in life settlements vary from deal to deal, but getting something $250,000 for a $500,000 policy would be a huge perk!

If you’re nervous about trying to negotiate a life insurance settlement on your own, there are people out there who can help. They’re called “life settlement brokers“, and they can be a tremendous asset. Good life settlement brokers can help you find decent investors and even negotiate a fair settlement!