Life Insurance is a valuable financial asset that serves a very important purpose throughout a lifetime. A life insurance policy may have originally been purchased for family income protection, or to help pay estate taxes. However, in your senior years that same life insurance policy may no longer serve it’s original intended purpose, or it may have become too expensive to continue.
Your life insurance needs have changed and you are interested in learning options before surrendering the policy back to the life insurance company.
You may have heard that you can sell a life insurance policy, known as a life settlement. Below we will give you the steps to qualifying for a life settlement.
Let’s first talk about what is a life settlement and and why sell a life insurance policy?
A life settlement is a financial transaction that involves a policy owner selling a life insurance policy to an investor, sometimes referred to as a life settlement provider. In exchange for selling a life insurance policy, the policy owner receives a lump sum cash payment today, which is a percentage of the current death benefit. The investor will assume all future beneficiary rights and ownership to the life insurance policy, including rights to the death benefit. It will be the investor’s job to maintain all premiums moving forward.
While surrendering the policy directly to the life insurance company and receiving the cash surrender value may be enticing to the policy owner, a life settlement option may provide the policy owner with up to 10 times more cash. The same policy that has a $10,000 cash surrender value with the life insurance company may be worth $40,000, $60,000, or even $125,000 if sold as a life settlement.
Now let’s explore how you qualify for a life settlement.
Qualifying for a life settlement is fast and easy. You can learn about life settlements and qualify directly through a website or via phone. There is a large network of both life settlement companies and life settlement brokers available to guide you through the life settlement process. In addition, the Life Insurance Settlement Association can also provide guidance and information to help you navigate and learn if a life settlement is the right option.
There are 4 key steps to Qualify for a life settlement:
Step 1 – Do You Meet The Criteria?
Step 2 – Gather Your Policy Information
Step 3 – Consult with a Life Settlement Broker (recommended)
Step 4 – Ask Questions and Explore All Options
Candidates for life settlements are typically age 75+ or older and own a life insurance policy with a face amount in excess of $100,000.
A life settlement is only possible when the policy’s market value exceeds the cash surrender value. Key factors in determining the market value of a policy are the death benefit, the cost of future premiums, and the life expectancy of the insured.
Life expectancy is the key component in determining the market value of a life settlement transaction.
The lower the premiums and the shorter the life expectancy, the higher the selling price. This is because the greater the amount of premiums that need to be paid and the longer the investor must wait for the death benefit, the lower the policy value. LISA
Qualifications for a life settlement generally include:
• Insureds age 75 or older
• Insureds with a life expectancy of less than 10 years
• Insured may have one or more health impairments
• Policy type is Universal Life, Convertible Term Life, Whole Life and Second To Die are most common life settlements
It should be noted that a life settlement is not an option for every policy owner.
Once you make the decision to explore selling your life insurance policy, you should gather your life insurance policy information. If you do not have a physical copy of your life insurance policy, you can request a new copy from the life insurance carrier directly, or contact your life insurance agent.
Many websites have a life settlement application you can complete. You can also call the life settlement company or broker directly and speak with a life settlement advisor.
To get immediate assistance with selling a life insurance policy contact Life Policy Solutions at 844-440-7355, or visit www.CashOutLifeInsurance.com
You will need to know the following information:
• Policy Face Amount, or Death Benefit
• Insured’s name, if different from policy owner
• Premium cost
• Premium Frequency
• State the policy is issued in
• Policy Type – Is the policy a Term Life, Universal Life, Whole Life, Variable Life, or Survivorship Life
• Are there any loans on the policy
You should also be prepared to provide a brief summary of the insured’s health to the life settlement broker or life settlement company.
A life settlement broker is a very important part of the life settlement process and their value to policy owners should no be overlooked. A life settlement broker is a person, who for a commission fee, will represent the sale of a life insurance policy to a network of life settlement buyers. A life settlement broker has the ability to negotiate the terms of the sale and potentially increase the cash offers by creating bidding wars among the buyers.
A life settlement broker should always work in the best interest of the policy owner and not in the best interest of the life settlement buyer.
A life settlement broker, such as Life Policy Solutions, will help policy owners navigate the life settlement process. The broker’s job is to not only represent the sale of the policy and generate the highest offers, but to also be available to answer any questions that may arise before, during, and after the sale of a life insurance policy.
While going direct to a life settlement provider can save a policy owner on commission fees, it may not be in the owner’s best interest as they may not receive the highest possible offer on the life settlement. The more buyers interested in purchasing the life insurance policy the higher the value. A life settlement broker brings experience, guidance, and buyer expertise to the life settlement sale process.
To learn more about Who A Life Settlement Broker Represents visit this informative article here.
When looking to sell a life insurance policy for cash it is important to explore and understand all options. A life settlement is just one of many solutions available to policy owners. Other options include surrendering the policy to the insurance company, reducing the death benefit, or accessing an available accelerated death benefit.
You may consider surrendering the policy directly to the life insurance company for a lump sum cash payment. To learn about your cash surrender value, contact the life insurance company who issued the policy and ask for the surrender value.
If you still need a portion of life insurance death benefit, you can ask your life insurance agent, or the company, to lower your premiums and decrease your death benefit.
Another option to discuss is whether your life insurance policy has an accelerated death benefit option. This rider is added to some life insurance policies allowing insured’s with a chronic or terminal illness to access a portion of the death benefit in their time of need.
When it comes to life settlements, you can explore two types of life settlements, a lump sum cash buyout or a retained death benefit option. A lump sum cash buyout is exactly as it sounds. It is a single payment for the purchase of your life insurance policy. A Retained Death Benefit Life Settlement allows policy owners to sell only a portion of the life insurance death benefit and retain, or keep, the remaining portion to be payable at the time of the insured’s passing. A retained death benefit life settlement is not available in every state. A life settlement broker can help guide you through the understanding and availability of both life settlement options.
The more questions and information you arm yourself with, the better prepared and informed you will be when it comes to exploring and qualifying for a life settlement.
To learn more about selling your life insurance policy as a life settlements, and if you qualify please contact Life Policy Solutions a licensed life settlement broker, or visit LISA.org
To learn about the Reasons To Sell A Life Insurance Policy visit our informative article here