According to the Life Insurance Settlement Association, over 710,000 life insurance policies are lapsed or surrendered each year. Consequently, approximately seven billion dollars in combined face value is lapsed each year by seniors in the United States over the age of 70.
After a life insurance policy lapses, the life insurance company is not under any legal obligation to pay the beneficiaries if the policyholder passes away. The reinstatement process requires policyholders to be in good health with proof of insurability. Additionally, all missed insurance premiums must be paid to the insurance company.
The viatical settlement process allows late-stage cancer patients to explore financial options before lapsing the life insurance policy. Even if you decide to keep your life insurance policy, understanding the face value of your policy can provide financial peace of mind.