Did you know you can sell all or a portion of a life insurance policy, even term insurance?
(4 minute read)
Taking a step back to evaluate if selling a life insurance policy is the right decision for you is a meaningful conversation to have with your family and financial advisor. With any decision of this magnitude, it is crucial that you have all the information necessary to make an informed decision. There is plenty of information available on how to calculate a life insurance settlement, but before you get to that point, you need to know if you are eligible to sell your $50,000 policy.
This amount of money can be life-changing, and unfortunately, if you are looking to sell it for a cash value, you won’t be able to. Along with an age requirement of 65, the face value of the policy needs to be at least $100,000 to sell. Despite those limitations, you still have options with your life insurance policy, and this blog was created to answer some of those pressing questions.
Is Selling your Life Insurance Policy a Good Idea?
Before we elaborate on the details of selling a policy, we need to understand whether selling your policy is a good idea at all. Selling a life insurance policy seems like a great option if you quickly need more liquid money. However, selling your policy is only beneficial in a limited number of situations. Let’s look at the advantages and disadvantages of the life settlement route.
- Advantages: Arguably, one of the biggest advantages to selling your life insurance policy is the lump-sum payout. This will provide the policy holder with a liquid asset they can immediately put towards expenses like medical bills, loans, investments, or anything else they would like. Another advantage of selling your life insurance policy is that you no longer need to pay the costly premiums associated with it.
- Disadvantages: The primary disadvantage that many people who sell their policy point to is the tax implications. You must pay taxes on the amount you receive that exceeds your premiums. For example, if you paid $25,000 in premiums and received a $60,000 settlement, you would pay taxes on the $35,000 difference.
Is $50,000 Life Insurance Enough?
If your goal is to sell an unwanted life insurance policy, then $50,000 dollars will not be enough. The best course of action if this is your situation is to talk with both your financial advisor and a life settlement advisor. Our team at Life Settlement Advisors offers plenty of resources to help you like a life settlement questionnaire, term life settlements information, and a video breaking down if you can sell a portion of your life insurance policy.
If you still want to move forward with getting rid of your policy, you can look into a policy surrender. Surrendering your life insurance policy means that you are cancelling it directly through your insurer. The benefit of this method is that you are still able to collect on any remaining cash value. Once you surrender the policy, the premiums stop as well. Surrendering can be a great alternative, but you should keep in mind that it is possible to receive no payout at all through this method. As always, we recommend talking to your financial advisor before making any major decision like surrendering your policy.
How Much Can you Sell a $100,000 Life Insurance Policy For?
If your policy is at least $100,000, you can consider a life settlement. On average, you can expect to get around $20,000 from a $100,000 life settlement. This is not the case every time, though. Your payout amount can vary depending on the type of policy you have, beneficiary amount, and other factors.
This is why you should shop around to find the best companies that buy life insurance policies. This search can leave someone quite exhausted. Therefore, to make this search more manageable, look for a life settlement advisor who aligns with the following sentiments.
- Understanding: A good company or advisor will understand that the everyday person does not know the ins and outs of selling their policy. When you go to an advisor, it might be the first time you have truly thought about selling your policy. Your advisor should help you understand your options and make the best decision for your future.
- Experienced: This one seems obvious, but a quality advisor should be able to answer all of the questions you have about selling your policy. With years of experience in the industry, they will have seen all kinds of different situations and payouts to give you the best advice moving forward.
- Customer Focused: A good life settlement advisor will understand the importance of this decision. Even if they have multiple clients they are working with, you should feel like you are their number one priority whenever you speak.
Life Settlement Advisors: Choose with Confidence
At Life Settlement Advisors, we understand the impact of big decisions that can change your future, and we aim to give our clients a confident voice regarding these types of decisions. Please fill out our simple Qualification Calculator so we can get started on getting you the money you need.
Did you know you can sell all or a portion of a life insurance policy, even term insurance? Selling an unwanted life insurance policy is no different than selling your car, home, or any other valuable asset that will create immediate cash. Contact us today to learn more.
Get in touch with Life Settlement Advisors today to take the first step toward converting your policy into cash.
Life Settlement Advisors