Selling your life insurance policy for cash is known as a life settlement, as it’s an excellent way to earn money for an unwanted policy. A life settlement is much more valuable than surrendering your policy back to your insurance company. You can work with a third-party buyer to sell your life insurance policy for more than the cash surrender value but not as much as the total face value of your policy.
Who Do You Work With to Sell Your Life Insurance Policy?
You can choose from two different options for selling your life insurance policy. You can work directly with a life settlement provider or partner with a life settlement broker who will work on your behalf by reaching out to several providers to find the best deal. A broker will earn a commission from the settlement, as it can be up to 20% or higher.
Process for Selling Life Insurance Policy
You will need to follow several steps for obtaining a life settlement, such as filling out a detailed health questionnaire and authorizing the life settlement provider to review your medical records. A copy of your insurance policy will also need to be reviewed. The underwriting process involves evaluating all aspects of your policy and medical records to understand their value.
Once everything is complete, a life settlement provider will make an offer. You can accept the complete cash offer, or you may prefer to receive a smaller cash payment and Retain a Death Benefit by keeping a portion of the policy’s benefits without paying future premiums. Afterward, the closing process involves the transfer of ownership of the policy, as you will receive your life settlement payment once it’s finished.
Life Settlement and Retirement Funds
The cash offered for your life insurance policy can vary significantly between cases. However, a recent study from the London Business School showed that policy owners received around four times more cash than those who surrendered their policy. All of this additional money can help add to retirement funds. Reaching out to a life settlement provider can help you better understand the value of your policy.
What Impacts the Cost of Life Settlements?
Several factors impact the cost of life settlements, such as the life expectancy of the insured, their age, and current health. The size of the policy also plays an essential role in its value. Calculating all of these different things can give you a better idea of the policy’s value. These factors are just one of the many reasons why the value of a life settlement can vary significantly from one policy to another.
Why Should I Sell My Life Insurance Policy?
People decide to sell their life insurance policy for a variety of reasons. Financing retirement is just one reason to sell your policy, as it can also be used to prepare for unexpected expenses. You may no longer need the coverage, as life insurance is often bought for income protection to cover any of your living expenses in the aftermath of an emergency. The policy might no longer be affordable, as getting a life settlement is helpful if you need to recoup some of the premiums you spent over the years. Contacting a retirement financing planning advisor is recommended to help you determine the best choice to meet your needs.
Additional Benefits of Life Settlements
Life settlements offer numerous benefits besides helping you to increase your retirement funds. For example, you won’t have to worry about paying premium payments, and you will also get much more cash compared to the surrender value of your policy. Earning a large amount of money is especially beneficial if you are nearing retirement.
Do I Have Any Restrictions On How to Use My Life Insurance Money?
A United States Supreme Court Case in 1911 established life insurance as personal property, which allows it to be sold or transferred as any other property or investment. The cash you receive from a life settlement is yours to spend however you wish, whether it’s to help increase your retirement funds, cover unexpected expenses, go on a vacation, or any other option.
Closing Thoughts
Deciding to sell your life settlement is an excellent choice for many people, whether you are looking to cover medical bills or if you are looking to increase your retirement finances. Working with a retirement finance advisor is important in guiding you throughout the process to ensure you receive the best deal for your life settlement. Finding additional funds for financing retirement isn’t always easy, as learning more about life settlements is an excellent option if you have a life insurance policy.
