Did you know you can sell all or a portion of a life insurance policy, even term insurance?
Most people purchase life insurance when they are looking for ways to protect their family’s financial stability in the event of death. If a policyholder has an unwanted or unneeded life insurance policy, they may wonder if they should continue paying their premiums or if they should cash in their policy. Life insurance policies build a cash value over time, so selling a policy for a lump sum of cash is an option to explore.
When selling a life insurance policy, it is considered a life settlement. A life settlement could be the right option for you if your need for cash is greater than the need for your beneficiaries to receive a life insurance payout.
Life settlements are better than surrendering a policy because the cash proceeds in a sale are much higher. When surrendering a policy, policyholders only receive a single offer from the insurance company, resulting in a lower value. Settlements enable policyholders to seek multiple offers and negotiate so they get the highest possible value for the policy.
How Much Do Life Settlements Pay?
So how much do you get when you sell a life insurance policy? A policy’s value on the secondary market is typically two to four times its cash surrender value. According to Forbes Advisor, the average policy face value in life settlements was $1.24 million in 2018.
When trying to make a life settlement, working with a life settlement company generally produces a higher cash payout because they create a competitive bidding environment for your policy among a network of premium buyers, which drives up the price. Because these specialized companies do the comparison shopping for you, they get a commission, which varies from company to company. Although policyholders can work directly with a single buyer, there’s no competition and no reason for that buyer to put forth a strong offer.
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.
I am always happy to answer any questions about these life-transforming transactions.
Life Settlement Advisors