Can You Sell a Portion of a Policy?

(3 Minute Read)

For many who choose to opt for a life settlement, selling the entire policy makes sense. When your client simply doesn’t have a need for the policy anymore, or it just doesn’t make sense to keep paying the premium, a life settlement is the perfect option. But what about someone who wants to retain part of their policy?

Whether they simply need to downsize their policy so they aren’t paying the full premium anymore or they want to ensure their heirs will still receive part of the death benefit, there’s an option for seniors to sell a portion of their life insurance policy as a life settlement while maintaining the rest. Here are some of the top reasons a client may choose to surrender a portion of a life insurance policy:

  • Eliminate or lower unaffordable premium payments.
  • Use the money saved to purchase a more applicable policy.
  • Invest in other assets.
  • Improve quality of life.
  • Create cash from a dormant asset.

This option allows the insured to have extra money for whatever life is throwing at them: whether for medical bills or a vacation.

Consider a case in California we highlighted recently. A man wanted to lower his premium payments, but not fully surrender the policy. He was told by the life insurance company that his only options were to surrender a portion of his policy, or to let it lapse entirely. He chose to surrender a portion, which lowered his monthly premium payment, but also didn’t offer any cash value on surrender. The insured later learned about the life settlement option, where he would have been offered cash for the portion of his policy and could have retained the remainder. (There’s an ongoing court case between the insured and the insurance company.)

Even though the life settlement market has existed for over 20 years, there are still many options it can provide that simply aren’t acknowledged by insurance companies. The fact of the matter is that seniors can get cash for their life insurance policies when they need it.

If your client needs to lower premium payments but wants to retain part of a policy, a life settlement may be the perfect option to get greater value from it. Complete our qualification calculator to see if it’s an option for you.

I would be happy to answer any questions you may have about this or any other life settlement topic. I can be reached at 888-849-0887 or llagrotte@lsa-llc.com.

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