Life Settlements vs Reverse Mortgages

Both Life Settlements and Reverse Mortgages are financial transactions that seniors can complete to help fund their retirement years. Understanding their differences and considering the pros and cons of each are essential when determining if one of these financial planning tools could be a good fit for your individual situation.

Life Settlements

A life insurance settlement is the sale of a life insurance policy to a third party for a fair market value. In many cases, the amount received will be substantially higher than the cash surrender value offered by insurance companies. A policy owner receives a cash payment*, either in a lump sum or stream of periodic future payments, while the purchaser of the policy assumes all future policy premiums and receives the death benefit upon the passing of the insured. 

Here are a few details you should consider when determining if your policy qualifies for a settlement transaction and for general information purposes:

Qualifying Age of Insured

70 , or younger with health impairments

Health Requirements

Higher policy transaction sales value if illnesses present

Assets of Policy Owner

Not relevant

Availability

Determined by consultation between LILO and policy owner

Cash Payment

Lump sum, periodic payments or a combination of both options

Regulation of life settlements

LILO is a duly authorized agent of Orange Benefit Fund and is operating under the regulations of the Financial Services Commission of Ontario
*The amount Life Insurance Liquidity Options will pay you is based on several factors, including the policy face amount, age and health of the insured(s) as well as premium payments required to maintain the policy.

To learn more, check our FAQ or contact us to get a policy valuation.

Reverse Mortgages

A reverse mortgage is a loan available to homeowners that allows them to convert part of the equity in their homes into cash. In contrast to a traditional mortgage, in which the borrower must make payments to a lender, in a reverse mortgage the lender makes payments to the borrower*, who doesn’t have to pay back the loan until the home is sold or otherwise vacated.

Here are a few details you should consider:

Qualifying Age of Insured

55 or older

Health Requirements

Not relevant

Assets of Policy Owner

Liens on property may reduce value

Availability

Determined by appraisal value

Cash Payment

Lump sum, periodic payments, or a combination of both options

Regulation of reverse mortgage

Regulated by governing bodies in Canada including the Financial Consumer Agency of Canada
*The amount you get from your loan is based on several factors, including your home equity, where you live, your age, your home’s appraised value, and current interest rates.

If you are interested in this strategy, learn at CHIP Reverse Mortgage website.

If you also want to learn more about your life settlement options, contact us or apply to get a policy valuation.

Need help?

Call us at 1-866-888-5456
Or email us at info@lilo.solutions