If you currently have a life insurance policy that you don’t need or can’t afford anymore, selling it may be an option worth considering. Selling life insurance allows policyholders to get value from a policy they no longer want or need. Before you decide to sell your life insurance, it’s important to learn everything you can about it. Find out all the important information you need to know if selling your life insurance policy is the right move for you. Click here to learn more on how to sell your policy.
What is a Life Settlement?
Selling an unwanted or unneeded life insurance policy is called a life settlement. It involves selling your policy to a third-party investor, who then becomes the policy’s new owner and beneficiary. The investor will continue paying premiums and then collect the death benefit when the insured passes away.
Life settlements allow policyholders who are seniors, terminally ill, or chronically ill to get cash value for their policy while they are still alive. The process provides an alternative to letting a policy lapse or surrendering it for just the cash surrender value. Selling your life insurance policy lets you net significantly more than the surrender value.
Reasons People Sell Life Insurance Policies
There are a few main reasons why people consider doing a life settlement. Many decide to sell life insurance when they no longer need life insurance because their kids are grown or their debts are finally paid off. For others, the premiums have simply become unaffordable due to financial hardship or illness.
Some people’s health outlook may also change significantly and they may want to access the funds from their policy now rather than leaving it to beneficiaries later, while others might need money for pressing medical bills. No matter what situation you are in, selling your policy could get you immediate cash in hand.
How Does the Life Settlement Process Work?
If you decide to move forward and sell a life insurance policy, here is an overview of the steps involved in the life settlement process. First, you need to research and find a reputable, licensed life settlement provider to work with. Gather all relevant policy details to share with your chosen provider.
Next, get offers from investors interested in buying your policy based on factors like your age and health. Carefully review the offers and select the best one for your needs. After choosing an offer, sign paperwork to officially transfer policy ownership to the new owner. The new owner may have you complete a health screening to confirm your medical history.
After meeting all requirements, you’ll receive your lump sum payment, typically between 50-80% of the total policy face value. The process takes 2-3 months on average. The price you’ll be offered for your policy varies case by case and depends on personal factors like your age, health status, and life expectancy.
When You Want To Sell Life Insurance Policy: The Bottom Line
For policyholders with unwanted or unaffordable life insurance, sell life insurance through a life settlement to access funds quickly. Follow the steps above to get quotes, pick an investor, transfer ownership, and collect your cash payout. It can provide funds to improve your quality of life now.