Getting a life settlement is a viable but lesser known option for turning your life insurance policy into a valuable asset. Life insurance policies, when sold for cash become life settlements—but they’re sold on certain conditions.
Let’s take a look at some factors that affect your life settlement:
Life Settlement Isn’t the Same as Life Insurance
We’re certain you already know this, but since the terms are often (and erroneously) used synonymously, it’s important to delineate them.
Life insurance policyholders who qualify for life settlements can sell their policy to a “life settlement provider.” These are licensed entities who are willing to purchase your policy for cash; which is paid in a lump sum.
Moreover, what you get is generally more than the cash surrender value of the policy. The new beneficiary—the entity that bought the policy off you—will receive the death benefits upon your passing.
Are You Eligible for Life Settlement?
The first question you need to ask is whether or not you qualify for a life settlement. Although the circumstances are different for everyone, the basic determinants are the same. These are:
- Your age: You’re eligible to sell your life insurance policy if you’re 70 or older.
- The size of the policy: The face value of your life insurance policy needs to be at least $100,000 or more.
- Eligible types of policies: The policy types that qualify for life settlements include whole life, convertible term, joint and universal life policies.
If you aren’t sure how much your policy may be worth, or you’re still uncertain whether or not you should proceed with a life settlement, here’s a free life insurance calculator that can help you.
Do You Need to Sell Your Life Insurance Policy?
To be fair, we don’t know if you need to sell your life insurance policy or not—only you can know that. Most people who sell their policies realize that:
- They no longer need it: People take out life insurance policies because they have dependents who are a financial responsibility even after their deaths. However, if you have no dependents left to financially provide for (such as a wife or children) you don’t really need the policy.
- They can’t pay the premiums: With life insurance policies come premiums that must be paid duly. These can get debilitating over time and can transform into a great financial burden. Life settlements are also a way of alleviating the financial burden associated with costly premium payments.
- Your term policy will expire soon: Once a term policy expires, converting it to permanent insurance can often be prohibitively expensive. Even though term policies have no cash value, they still may qualify for a life settlement.
- You need money: Finally, one of the major reasons why so many older adults choose a life settlement is because they’re retired and no longer have a paycheck coming in. A comfortable retirement life is a dream every American has from the day they start working. Life settlements allow you to enjoy your golden years in peace.
About Prosperity Life Insurance
Prosperity Life Insurance is a life settlement brokerage firm that helps older adults sell life insurance policy for cash. You can get in touch with one of our experts by giving us a call at 800-591-2551.