What You Need To Know About Life Settlements

Are you wondering if it is possible to sell your life insurance for cash? The main purpose of life insurance is to provide financial support to your loved ones after you pass away, but it can also be considered a lucrative asset. You can sell your life insurance policy through a process called life settlement to get cash to cover pressing issues or emergencies. However, there are certain things that you should understand about selling life insurance plans before investing or selling one. Read on to learn what you need to know about life settlements and the reasons why it is important.

What is Life Settlement?

A life settlement describes the transaction of selling your existing life insurance policy to another party for a higher cash surrender value. However, the amount you get is less than the death benefit. The buyer of the plan will continue to pay the premiums, and they will collect the death benefit when the insured party dies. The policy owner will transfer ownership to the buyer in exchange for immediate lump sum cash. There are also other reasons why some people consider selling their life insurance plans. Apart from seeking money, you can also sell the policy if you can no longer afford the premiums, or you do not need it anymore. When you are struggling to pay for your long-term care in retirement or meet your healthcare costs, a life settlement can give you a lifeline.

How to Sell Your Life Insurance

Life settlements are commonly handled through brokers. A broker must be licensed, and they should have a fiduciary duty to protect the interests of the policy owner. Brokers will auction the life plan and get bids from different buyers. Essentially, brokers aim to get the maximum price, and they also get a commission upon successful execution of the transaction. The commission varies depending on the value of the life settlement.

Consult Professionals Before Selling Your Life Insurance

It is crucial to seek advice from financial experts before you sell your life insurance policy to a third party. The professionals at QCapital Strategies explain that many people are not aware of the real value of their life insurance policies, and that’s why they may end up getting less than what they deserve. Hiring an experienced consultant will help you take advantage of the opportunities that may come with a life settlement, so you can capitalize on the true value of your policy.

Life Insurance Suits Your Changing Financial Needs

Life insurance is vital since you can use it to cover other financial needs that you may encounter in life. It becomes easier for you to consider life settlement to meet your current needs. Obtaining a loan to cover your healthcare needs may not be possible as you age. However, a life settlement can be the most viable option that you can consider. When you sell your life insurance plan, you get a lump sum cash payment. Instead of selling your house, a life settlement can cover your financial and retirement needs.

Which Type of Life Insurance Policy Can you Sell?

You can sell either a permanent life policy or a term life policy. However, for a term life policy, the investors usually prefer it to be converted to a permanent policy. The life expectancy of the insured person must be shorter than the entire term of the policy. Universal life insurance policies are also sold by many parties. Brokers usually consider your health and age before they buy your policy.

You must be sick or old enough not to outlive the term of your life insurance policy. The average age of selling a policy through life settlement is 75 years. If you are younger than this age, then you should have a serious chronic health issue and a life expectancy of fewer than two years. You should no longer be able to perform daily activities like bathing, eating, or other things without assistance.

If you have a life insurance policy and you no longer need it or can afford it, you can sell it to a third party who will take over ownership and premiums. This process is known as a life settlement, and it provides you with the opportunity to get the much-needed money to cover different financial needs during your retirement. However, potential buyers of life insurance policies will consider your life expectancy before they buy the plan, which means your age will determine how quickly you can sell your insurance plan.