An asset is defined to be something tangible or intangible that has cash value for the future. We don’t typically view life insurance policies as assets, but the truth is, certain types of life insurance policies qualify as assets.
Is Whole Life Insurance An Asset?
Whole life insurance (or permanent life insurance) provides extensive coverage and benefits to policy holders. It helps build cash value, qualifying it to be considered as an asset.
With whole life insurance, a certain chunk from the premium payments you make is accumulated into a savings component that’s tax-deferred. This is the cash value of the life insurance policy in question, and it tends to grow over time. Thus, the net worth of the policy increases over the years, with the policy itself acting as an investment of sorts. For this very reason, whole life insurance policies are categorized as assets as they have heightened economic value that only increases over the years.
Does Term Life Insurance Count As An Asset?
Term life insurance policies provide coverage for a set number of years, usually between 10 and 30 years. However, the specified “term” for the policy can be much shorter as well. While some policies can be converted to permanent insurance before they expire, this causes the insurance premiums to increase considerably. The beneficiaries of term life insurance policies get death benefits if the policy holder passes away while the policy is still active.
So, do term life insurance policies count as assets? Strictly speaking, they don’t. However, some term policies may qualify for a life settlement and which could make them a valuable asset
Life insurance policies that are permanent in nature qualify as financial assets and are treated as such. However, policies that don’t have a cash value (even though they provide death benefits) such as a term life insurance policy aren’t considered to be assets. The type of insurance policy you have determines its status as an asset.
So, what do you do with a life insurance policy that you no longer need but one that still qualifies as an asset? You may be able to get the cash settlement payment upfront!
Whether you no longer want a life insurance policy you purchased years ago, or can no longer afford to keep paying the hefty premiums, you may have a way to prevent it from lapsing. You may be able to sell your insurance policy for cash through Prosperity Life Settlements. We also offer a free life insurance settlement calculator to help you determine what your policy may be worth.
Get in touch with our life insurance settlement brokers today to assess if you qualify for a life settlement.