Do You Have a Reason To Sell Your Life Insurance Policy?

A “life insurance settlement” presents a unique opportunity to a policy holder to extract the maximum possible value from an existing life insurance policy if he no longer needs the policy. He can re-purpose those funds for alternative needs. Many people choose this option because the cash value of a life settlement generally exceeds the surrender value that would have been paid by the life insurance policy.

A life insurance policy is personal property just like a house, car, stocks, and bonds. You can sell your life insurance policy like you sell other personal property items. The sale of a life insurance policy is called a life insurance settlement, life settlement, or senior settlement.

When the life insurance policy owner sells his own life insurance policy, he transfers all rights and obligations to a new owner. The purchaser of the policy will then become the new owner and the new beneficiary of the policy. He will be responsible for making all of the future premium payments. And, of course, the new owner now collects the full amount of the death benefit when the insured dies.

Policies are sold for many different personal or business reasons. Below are some of possible reasons for considering a life insurance settlement:

  • The original purpose for the policy no longer applies.
  • The beneficiary of the policy died and no alternate exists.
  • The policy holder is chronically ill, so selling the current policy provides needed funds to cover financial burdens caused by illness. A viatical settlement gives the ability to regain needed financial security.
  • If the policy holder is over the age of 65, the life settlement or senior settlement maximizes the current assets by eliminating premiums and getting required funds that can be used today.
  • The insured person wishes to distribute its value while he or she is living.
  • The personal financial situation has gone bad and the owner is unable to make premium payments.
  • The policy owner’s current asset mix is weighed too heavily in life insurance.
  • The owner wishes to invest in a more appropriate product, such as a lower cost survivor policy, single premium annuity for supplemental income, long-term care insurance, or other asset protection tools.
  • A family trust has eliminated the need for personal life coverage.
  • The policy holder needs cash to fund alternative healthcare that the present insurance does not cover.
  • The policy was purchased to ensure the availability of funds to pay off a mortgage, however, the mortgage has been paid.

When a policy is in danger of lapse, the policy holder may be able to turn it into cash.