Is a Life Settlement a Good Idea?

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

(5-minute read)

Has your life insurance made life more… difficult? Whether your circumstances have changed or you simply need less coverage, paying the premiums can always present a problem. As your needs change, so do the solutions to your life insurance policy. If you find that your policy isn’t working for you, it might be time to consider selling your life insurance policy through a life settlement.

Below we’ll discuss whether a life insurance settlement makes sense for you.

Is a Life Settlement a Good Idea?

Overall, everyone’s answer to whether or not they should pursue a life settlement is different. Your life and financial circumstances might be preventing you from making payments on an insurance policy or you may no longer find it necessary. There are several occasions when a life settlement might be the correct answer for you. You might begin to see if you qualify by reviewing a life settlement calculator. However, it’s essential to reach out to life settlement companies, like Life Settlement Advisors, when considering a life settlement so they can tailor a plan specifically for you. Here are a few situations where pursuing a life settlement could benefit you:

You have unexpected financial circumstances.

If you find yourself in a tight spot with money due to unforeseen circumstances, you can get a life settlement for your life insurance policy. This can help alleviate any financial burden you might possess and allow you to take care of your affairs. 

Your insurance policy is too expensive.

Insurance can cost a lot and you might be unable to maintain payments. Getting a life settlement would take the impact off your wallet and allow you to manage your finances to better suit your needs day-to-day. 

You want to downsize your policy.

Sometimes you don’t need a comprehensive policy anymore. It is possible to sell only a part of your policy, so you can maintain coverage while downsizing to what makes sense. In this case, a life settlement would allow you to stay covered and give you a financial benefit.

Your life circumstances have changed.

Your life insurance policy may no longer meet your needs due to any number of life changes. Maybe you held insurance to ensure your family had financial assistance in case of your passing. It’s possible that the death benefit won’t suffice and you would rather find security in cash. No matter the circumstances, a life settlement could help you when things change and a life insurance policy no longer works for you. 

How Does a Life Settlement Work?

Simply put, a life settlement is selling your life insurance policy to a third party rather than letting your policy lapse or surrendering the policy for its cash value to the insurance company. A life settlement buyer pays you a lump sum, typically more than the insurance payout and less than the death benefit. The buyer agrees to pay any additional premiums that might be required to support the cost of the policy for as long as you live, in addition to paying you a lump sum for your policy. 

If there’s any hesitation due to life settlement taxation, it’s important to note that the proceeds may be taxed. You can also consult with your tax advisor to understand the tax implications of this decision. 

Who Is the Owner of a Life Settlement Contract?

What is a life settlement contract?

A life settlement contract is between the policyholder and a third party that is not the insurance company. This ensures the transfer of all responsibilities from the policyholder to the life settlement company. Once entered into the contract, the owner sells to the life settlement company for a lump sum.

Who owns the life settlement contract?

Before you begin the life settlement process, you are the policyholder and, therefore, the owner. However, once you sell your policy, a third party owns the contract. Essentially you receive a cash sum in exchange for your policy. Along with ownership, the company takes on all responsibility involved with your insurance policy and pays all premiums. This means that once you sell, you no longer have the responsibility of paying your premiums or any other charges that occur. 

What is a Life Settlement Broker?

A life settlement broker works to get you the most out of your life settlement. A life settlement broker is an individual who represents the owner of the insurance policy. The broker markets and negotiates a purchase price for the owner. Ultimately the broker wants to get the policyholder the highest possible value for their policy and sell for the highest amount. 

Life Settlement Advisors: A Voice of Confidence

At Life Settlement Advisors, we strive to provide the best advice to all of our clients and advisors. We can help you make an educated decision with a life settlement to ensure you get the most out of your life insurance policy. Take the next steps by seeing if you qualify.

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.

Leo LaGrotte
Life Settlement Advisors

Get in touch with Life Settlement Advisors today to take the first step toward converting your policy into cash.
Life Settlement Advisors
Leo LaGrotte
At Life Settlement Advisors, we strive to be a voice of confidence and assurance for our clients. Our goal is to educate you about the life settlement process so you can make an educated decision about whether it is right for you.