Confused about the life insurance secondary market? The life insurance secondary market may be defined as the place where people go to sell their life insurance asset to a third party because they no longer need the life insurance protection or in some cases they can no longer afford to own their policy. Over a life time a consumer who believes in the value of life insurance may have the amount of coverage they need change over the course of their life. A typical example is when one is a young parent and homeowner may own a large amount of life insurance to cover financial obligations such as to fulfill their mortgage obligation plus they may provide a fund to raise their children providing food, clothing, shelter, health insurance and an education. As the mortgage is paid off and the children are nurtured, provided an education and finally leave their parents home the need for life insurance may not be as great. This is one example where the insured may want to see if the life insurance secondary market can offer them an enhanced cash value other than the cash value offered by the company providing the life insurance protection. A second example of utilizing the life insurance secondary market is when a company owns life insurance on a key executive. Typically this insurance is purchased on employees or owners who are key to the business so much so that the business may cease to exist upon their demise. At some point commonly when a good corporate succession is implemented and a key person decides to retire the company may decide to sell their life policy on this key executive or owner to the life insurance secondary market for financial gain. The life insurance secondary market may offer a better cash payment to the selling business which would be determined as an amount greater than what the issuing carrier would provide if the policy would be surrendered.
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