I’M CHIEF EXECUTIVE of Mason Finance, a company that helps people turn their life insurance policies into cash—something known as a life settlement. HumbleDollar’s editor made me this offer: If I could write a balanced article about life settlements, clearly spelling out the pros and cons, he’d consider running it. I took him up on the challenge.
If you aren’t familiar with life settlements, you are not alone. An estimated 1.1 million seniors leave roughly $112 billion a year on the table by not selling off lapsing life insurance policies,
IN THE NEARLY 30 years we’ve been married, Donna and I have used fewer than a handful of insurers for home, auto and umbrella liability coverage. The occasional changes we have made have been due to either the recommendations of an insurance agent or, in one case, an especially disagreeable claim experience. Fortunately, even though three of our four daughters are skilled at dispatching cars with stunning efficiency, claims have been few.
Indeed, my biggest insurance complaint has nothing to do with how a claim was handled.
LIKE MOST PEOPLE, I don’t spend a lot of time thinking about my car insurance. And like most people, the only time I do think about insurance is when I need to use it. Four years ago, I was involved in a collision. My car was totaled and my insurance company processed my claim quickly. Because I was deemed to be not at fault by my insurance company, I didn’t have to pay my deductible or any other expense related to the collision.
INSURANCE IS A WAY to get others to shoulder devastating financial risks that it would be foolish to shoulder on your own. That’s why young parents with few assets need heaps of life insurance—but also why buyers of televisions shouldn’t get the extended warranty. Because the potential financial loss is modest, I’ve often argued that folks should skip not only extended warranties, but also trip-cancellation insurance.
But readers have pushed back, arguing that both types of insurance can make sense—in two particular situations.