Did you know you can sell all or a portion of a life insurance policy, even term insurance?
For many people, buying life insurance is something you do early in your adult life. It’s a form of protection for loved ones and dependents in the case of an unexpected and untimely death. Life insurance can help them cover the costs of mortgages, tuition, funeral expenses, and more.
But what if you no longer need the security a life insurance policy offers? Maybe you no longer have dependents to worry about or want to spend the value of your policy while you are alive as opposed to waiting for a death benefit. If that’s the case, you might want to consider selling your life insurance policy.
Selling a life insurance policy for cash, also known as a life settlement, is a great option for folks looking to get value out of their policy instantly. There are definitely pros and cons to a life settlement, as well as some other requirements to consider. In this blog, we will break all of that down and answer the factors that can help you fill out a life settlement calculator to figure out what your policy might be worth.
Is Selling Your Life Insurance Policy a Good Idea?
Like anything in life, there are advantages and disadvantages to selling a life insurance policy. Whether it’s right for you really depends on your unique circumstances. Because there are so many variables, it’s important to consult with your trusted advisors—like a tax expert, financial advisor, or a life settlement professional who can help guide you to a decision that’s right for you.
That being said, let’s take a quick look at some of the pros and cons of procuring a life settlement.
Pros and Cons of Selling a Life Insurance Policy
Like anything in life, there are advantages and disadvantages to selling a life insurance policy. When it comes to life settlements, some of the pros include:
- Provides more value to you than letting your policy lapse
- Provides more value than surrendering your policy
- Earn one lump sum of cash to use however you want
- No more premiums
- Use the funds for anything you like, no restrictions
The cons of a life settlement can include things like:
- No longer owning your policy
- Incurring taxes on your lump sum of cash
- Potential fees and commissions during the sale of your policy
- No death benefit for any beneficiaries
How Much Can I Sell My Life Insurance Policy For?
The answer to this question depends on several factors. First and foremost, you have to qualify to sell your life insurance policy. Generally speaking, the requirements for a life settlement include things like age, policy’s death benefit, life expectancy, policy type and health status of the policy owner.
At What Age Can You Sell Your Life Insurance Policy?
The minimum age to qualify for a life settlement is 65 years old. In fact, if you’re wondering “can you sell your life insurance policy if you are under 65?” The answer is maybe, it will depend on medical conditions that you are currently being treated for. Typically, the older you are, the more likely you are to qualify for a life settlement. However, age is not the only factor that determines your eligibility. For an insured to qualify they must have a life expectancy of 15 years or less.
How Does Health Status Affect My Eligibility?
Since the person purchasing your life insurance policy only makes money when the death benefit is paid, your current health and life expectancy are factors they will consider heavily. If you are projected to live another 25 years, your policy may be less appealing than someone with chronic ailments projected to live another 5 years.
What Value and Type of Policy Do You Need?
Your policy has to have a face value of at least $100,000. It also has to be either a universal life, convertible term, variable life, whole life, or second to die policy to qualify for a life settlement. Just about any life insurance policy can be sold.
Can I Sell My Life Insurance Policy for Cash?
If you meet the requirements for a life settlement, yes, you can sell your life insurance policy for cash. And best of all, a life settlement will give you a bigger payout than other ways of eliminating an unwanted or unneeded policy.
What Is The Cash Value Of A $100,000 Whole Life Insurance Policy?
Just like any other insurance policy, a life settlement payout for a $100,000 whole life policy would depend on your age, health condition, and policy premiums. A typical life settlement is worth around 20% of your policy value, but can range from 10-25%. So for a 100,000 dollar policy, you would be looking at anywhere from 10,000 to 25,000 dollars.
The specific value can vary widely, as seen in the above example, so consulting with a life settlement professional is crucial to get an accurate estimate for your unique situation.
Where is the Best Place to Sell Life Insurance? With a Trusted Professional like Life Settlement Advisors
At Life Settlement Advisors, we know selling your policy can be a big decision. It can be hard finding the best companies that buy life insurance policies or understanding all of your options. With more than 50 years of industry experience, we have the know-how and the passion to make sure you are well-informed and making the best decisions to achieve your goals. We strive to empower our clients and provide top-notch service as one of the best life settlement providers. Contact us today to learn more.
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.
I am always happy to answer any questions about these life-transforming transactions.
Life Settlement Advisors