A Senior Settlement Company is an establishment that buys unwanted policies from senior citizens and sells them off to other interested parties. The company becomes liable for all further premiums on the policy and its benefits, once the policy is bought by it from the original policyholder. The responsibilities of Senior Settlement Companies include buying the policy from the senior policyholder, customizing it according to present-day requirements, introducing it to interested parties and inviting bids, selling it to the highest bidder and compensating the original policyholder a lump sum amount in cash. These companies also maintain the current funds of the policyholder in an escrow account till such time as the policy is sold to someone else.

Senior Settlement Companies need to be licensed by the Departments of Insurance in their operating states. This license is for a fixed amount of years, after which it is to be renewed. Acquiring a license means that the company will abide by the rules of the National Association of Insurance Commissioners and its Viatical Settlement Act of 2001. Though the act concerns viatical settlements, several of its clauses can be projected into the Senior Settlement Company scenario.

People feel safer when they deal with licensed Senior Settlement Companies. There is almost no chance of fraud, which can occur when the policy is sold to some other party but there is cheating in the payment of the lump sum amount. The license requirements have become stricter in the wake of senior settlement scams that have cropped up in the last decade.

Licensed companies all over the country adopt uniformity in their modus operandi. Their calculations conform to national standards and approximations. Hence, there doesnt arise any question of negotiations. Also, licensed companies have contacts with more serious buyers, which make more genuine bids available to the policyholder.

Yet there are several unlicensed companies operating within the state. Policyholders are advised to deal with them at their own risk. Several unlicensed companies close shop when their business dwindles, leaving their senior clients in the lurch. Hence, it is very important to ascertain whether the settlement company has a license from the Department of Insurance before approaching it with policy settlement problems.