Consumer Alert: Rochester residents got an offer in the mail. Is it a scam? We investigate.

ROCHESTER, N.Y. (WHEC) — I’m alerting you to something you got in the mail. I love our viewers. One of you sent me this ad from a company called Ovid urging you to sell your life insurance policy.

This viewer and everyone else in our area likely got this ad in a circular that arrived last week. Our viewer believes this is a real rip-off. So I did some research for you. There are reasons some seniors sell their permanent life insurance policies. Usually, it’s to pay for assisted living, long-term health expenses, or the insurance premiums have become too expensive. Rather than surrender the policy to the insurer for its cash value, they sell their policy to third-party investors.

So here’s how it works. Let’s say your life insurance policy has a death benefit of $1 million. If you surrendered your policy to the insurer, let’s say you get $100,000. But a third-party investor might pay you $250,000, more than the cash value but far less than the death benefit. Then when you die, the investors get the death benefit minus the $250,000 they paid you, leaving him with a profit of around $750,000.

For years, Betty White was the face of the life settlement industry. She pitched the product to "savvy senior citizens needing cash." Everybody loves Betty. So you have to love the product, right? Well, there’s a reason Money Magazine calls the life settlement industry "creepy."

When you sell your policy, there are third-party investors now paying your premiums. And those investors are waiting for you to die because the sooner you kick the bucket, the more money they net from the policy’s death benefit.

If you want to get rid of your life insurance policy because you can no longer afford the premiums, consider paying them out of the cash value of the policy instead of selling the policy. But there are situations in which selling your policy might make sense.

For example, your medical expenses are outrageous and you need the money now more than your kids will need it later. But before you call any of these life settlement companies, you need to know the cash value of your policy. If the investors are offering less than your cash value, you know it’s time to walk away. And that’s your consumer alert.