A senior life settlement involves the sale of an unwanted insurance policy to a third person at a price that is lower than the policys face value. The original policy owner gets a lump sum in cash. The third party is then legally responsible for all further premiums on the policy. This settlement amount, as a rule, exceeds the policys cash value accumulated until that date.

Senior citizens often opt for senior life settlements for a variety of reasons. This is mostly done when the person encounters an emergency or other financial need. The senior life settlement company buys the policy from him and collects his premiums in an escrow account. When the policy is bought by a third party, the original holder can stop paying the premium. Then the new buyer takes over, after paying the cash for the policy.

Generally, people take several policies in their early life. But, when they enter into old age, people find that they no longer have to keep many of those policies. Also, many senior citizens find it difficult to pay insurance premiums. In order to alleviate the financial strain of paying the premiums, many seniors choose to take a policy settlement.

There are many settlement brokers who make the entire process of life settlement policy easier. They first analyze the policies and auction them to various interested parties. The policies are sold to the person or people who offer the highest bid. The new holders are then liable for all the premiums on the policy going forward. Senior life settlement policies can be owned and bought by individuals or companies.