Cashing in Life Insurance Before Death

Did you know you can sell all or a portion of a life insurance policy, even term insurance?

(4-minute read)

If a person purchases a life insurance policy, they’re mostly looking to protect their family’s financial stability in the event of death. However, life events can happen such as the inability to afford premiums, the policy is no longer needed, and emergencies that can lead to wanting a lump sum of cash rather than a life insurance policy.  Policyholders might wonder if cashing in life insurance while they’re still alive is an option to them and if so, what are the requirements? Life insurance policies do build a cash value over time. A life settlement might be an option for you to explore when you have a policy you no longer want or need.

What is a life settlement?

The concept of a life settlement is fairly simple. A policyholder can sell their policy to an individual or a life settlement company via a broker in exchange for cash, essentially transferring ownership of the policy to the investor. The original policyholder receives a cash payment –exchange for the policy—more than the surrender value, but less than the policy’s prescribed payout at death. The investor will keep the policy by paying the premiums and reap a return on the investment by receiving the death benefit when the original policyholder dies. A policy’s value on the secondary market is typically two to four times its cash surrender value. 

How old do you have to be to sell your life insurance policy? 

One of the biggest questions to determine whether you are eligible to sell your life insurance policy  is your age. If you have no health issues, you have to be at least 70 for a male or 75 for a female in order to be eligible. For individuals with health issues, males have to be at least 65, and females have to be at least 68. These numbers can vary on occasion. In most cases, a policyholder must have a death benefit of at least $100,000. 

 

Is it worth selling your life insurance policy?

 Before selling your life insurance policy, there are a few things to consider, such as commission, financial dependency, and public assistance. Read more here to find out what questions to ask before selling a life insurance policy. 

 At Life Settlement Advisors, we provide a life insurance settlement calculator to give our clients a clear, immediate picture of the highest possible value they could get from selling a life insurance policy in a settlement. Qualifying for a life settlement is based on age, how long you’ve had the policy, its benefit value, and other factors. If you are approved, a life settlement can bring a far greater return of your money on the same investment than any surrender value. 

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 from selling your car, home, or any other valuable asset that will create immediate cash. Contact us today to learn more. 

Leo LaGrotte
Life Settlement Advisors
llagrotte@lsa-llc.com
1-888-849-0887

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