If you’ve been thinking about selling a life insurance policy that no longer meets your needs, you’ve likely come across the idea of a life settlement before. In case the term is new to you, a life settlement is a transaction in which you can sell all (or part) of an unwanted or unneeded life insurance policy to a third party (known as a life settlement company). In many cases, this represents a win-win, since:
- Policyholders can recoup more value from their policy than they would if they were to simply cancel their policy or let it lapse—four to seven times as much, in fact.
- Meanwhile, the companies that buy life insurance policies in life settlements consider these policies as investments. They take over paying the premiums, and then collect the death benefit when the policyholder passes.
At this point, you’re probably wondering, “Can I sell my life insurance policy for cash?” The short answer is “yes,” but in this article, we’re going to dive a little bit deeper into what it means to sell a life insurance policy—including the pros and cons of selling your life insurance policy and how much you might stand to make in a life settlement.
Is It a Good Idea to Sell My Life Insurance Policy?
If you are certain that you no longer want or need your policy, a life settlement could be your best option. As mentioned above, it’s a way to walk away from your policy with a cash payout that is likely to be much larger than you’d receive if you were to just surrender or cancel your policy.
Some people decide to sell their policies because they can no longer afford the premiums, while others are motivated by a pressing need for the money—to fund a vacation, pay medical bills, or for any number of reasons. Whatever your motivation might be for considering a life settlement, it’s easy to see if your policy is eligible or even submit your case to our team for review.
How Much Can You Sell a $100,000 Life Insurance Policy For?
No two life settlements are going to provide an identical return, but on average you can expect to receive around 20% of your policy’s value—meaning you could net a $20,000 payout in exchange for your policy. Several factors impact what kind of settlement you might receive, including policy details, the premiums needed to keep the policy going, the death benefit, the life expectancy of the insured and so on.
If you want to learn more about how whole life insurance policies’ cash value is determined, you can find a helpful whole life insurance cash value chart on Forbes’ website.
How Do Life Settlements Work?
The first step of the life settlement process is determining whether or not you should sell your policy. The appeal of the cash payout is undeniable, but it’s always wise to speak with a financial advisor or life settlement broker to make sure you’ve considered the pros and cons—and to help you find the best company to sell your life insurance policy to. By working with an experienced advisor, you’ll be able to get more into the finer details of your decision—including, for example, the potential tax implications of a life settlement.
How Long Do You Have to Wait to Sell Your Life Insurance Policy?
There are two time-based components that determine how long you might need to wait before selling your policy. In most cases…
- You will need to be at least 65 years old, there are a few exceptions
- Your policy will need to have been in effect for at least 2 years.
As you can imagine, there are exceptions to each of these guidelines. For example, certain health conditions might make you eligible before you turn 65—and some states may require a policy to be active for more than 2 years.
What Is the Downside of Selling Your Life Insurance Policy?
The primary downside of selling your policy is that you will no longer be covered by the policy—and your beneficiaries won’t receive its death benefit. That’s why it’s so important to talk to a financial advisor before making any moves like pursuing a life settlement—as you may either have better options available or maybe haven’t considered the full range of financial implications. It won’t take long for us to review your case and recommend your next steps!
How Much Will I Get If I Sell My Life Insurance Policy Today?
Connect with us to explore your eligibility, as well as what kind of life settlement payout you can expect if we decide to put your policy on the market. We’re ready to put our team’s 40+ years of combined experience to work with your case, helping you to maximize the value of your life insurance policy if (or when) you decide to sell.
