Selling Your Life Insurance Policy
Your life insurance policy is an assets and just like you bought it from your life insurance company you can sell it for an immediate cash payment to a life settlement company. Needs change over time and much like downsizing your home in retirement your life insurance may not be serving the same purpose it did as when you were younger.
Selling your life insurance policy may not be right for everyone but you should consider the life settlement option if:
- Premium Payments are Becoming Unaffordable: The cost of insurance on your policy increases as you age, so even if you have been paying a level premium you can see your cash surrender value dropping as your age increases. In addition number of insurance companies have announced significant ‘cost of insurance increases’ over the last year or two and are charging policy holders more premiums than they expected when first purchasing the policy years ago.
- You Need Liquidity Today: Cash now is what you need to help pay for current and/or unexpected expenses. Use your cash settlement to top up your retirement account or pay for ongoing medical care, it’s up to you.
- No Longer Needed: You originally purchased your life insurance policy to protect loved ones from the unexpected or maybe it was more for tax planning and estate preservation. As time goes on those needs have changed and you may not need the coverage you once thought you did. Estate taxes have also become more streamlined and have a higher exemption negating the need for expensive coverage.
- Your Coverage is Ending: Term life insurance is sold with a level period such as a 20 year level premium. When that time is up you can keep your coverage but at higher rates or you can convert into a more expensive permanent product (such as Universal or Whole Life). Life Settlement Companies do purchase old term policies that can be converted just like any other permanent product, so before you walk away find out if there is additional value to be found.