Did you know you can sell all or a portion of a life insurance policy, even term insurance?
(3 minute read)
People invest in life insurance because it is a necessary benefit. The payout of the policy is intended to cover final expenses, as well as provide for loved ones after we pass. But over a lifetime, our expenses and obligations change. In cases where a large life insurance policy is no longer wanted or needed, you may choose to let expensive policies lapse and save the cost of the premium payment. But we encourage you instead to explore the idea of selling a portion of your life insurance with no future premium payments.
Selling Only Part of a Life Insurance Policy
Selling a portion of a life insurance policy in a settlement is possible, even for term insurance. This process lets you maintain some portion of the life insurance with no future payments for your own beneficiaries, while the rest of the policy is sold to an investor. The investor will take over the premiums for the entire policy, and you no longer have to pay any premiums even on the portion you retain. This is also known as a retained death benefits transaction, allowing you the best of both worlds. Part of your investment in the policy is returned to you today, in the form of a cash settlement on the portion you sold, while another part of the investment is still set aside for loved ones in the future as the retained death benefit.
How Can A Retained Life Benefits Transaction Help Me?
Here are a few examples of ways we have helped our clients with retained life benefits transactions, including term life insurance settlements.
- A retired 72-year-old cancer survivor had a $1.5 million term policy. Since he wanted to keep some coverage in force, he was only planning to convert a small portion of this policy, $300,000, and let the balance of coverage lapse. We were able to get him $45,000 in a life settlement by converting and selling $1,200,000 of the policy. He kept $300,000 balance of the policy.
- A 53-year-old female was diagnosed with a cancer that was likely to take her life within 5 years. She wanted to enjoy her remaining years but needed additional cash to do things with her family. Fortunately, she owned a $1 million term insurance policy. She kept $100,000 of the policy for her family, and sold $900,000 of the policy, which enabled her to obtain a $350,000 cash settlement, enough cash to pay off debt and check boxes on the bucket list.
These are just some of the circumstances where a life settlement may help you make the most of your policy.
Find Out If You Qualify for a Life Settlement
Choosing to pursue a life settlement is a smart option for many individuals, but it’s also important to understand what it means for your finances and the qualification standards. At Life Settlement Advisors it’s our goal to make these transactions as easy, transparent, and profitable as possible for the policyholder and their financial advisor. Visit our online calculator to see if you qualify for a life settlement, or contact me with questions anytime.
Life Settlement Advisors