Life insurance serves a variety of purposes. It can give you a sense of security and peace of mind, regardless of your age, and provide for your spouse and children after you pass away. In fact, taking care of minor children or a spouse is one of the biggest motivators for purchasing life insurance. However, as time goes on, you may not need a large life insurance policy or any insurance at all.
That may be when you may start considering your options. Most types of life insurance policies can be sold under certain conditions — including universal life, whole life, variable life, and joint survivorship — and if you are wondering, “Can term life insurance policies be sold?” the answer is often yes. Here’s a closer look at this option, called a life settlement.
The Life Settlement Option
With a life settlement, you sell your current life insurance policy to a third party for a lump sum that is a favorable percentage of your coverage amount. The third party becomes the owner of the policy, is responsible for making the premium payments, and receives the death benefit when you pass away.
Most types of life insurance can qualify for a life settlement. These include universal life, whole life, variable life, term life and joint survivorship policies. To be eligible for a life settlement, the policyholder typically is 70 or older and has had a negative change in health status. The policy itself typically will have a death benefit of at least $100,000.
The life settlement process usually involves the following:
- You contact a life settlement broker for an initial conversation to learn more about this option. Life settlements brokers represent policy owners to obtain maximum value for their insurance policies.
- You complete an application that collects information about your policy and current health history.
- Your broker will obtain offers for the policy from life settlement providers/buyers.
- If you accept an offer on your policy, the sales proceeds are placed in escrow until your insurance company transfers the ownership and beneficiary of the policy. Once ownership and beneficiary changes are completed, the sales proceeds are released to you.
If you’re interested in learning more about this option, it’s smart to work with an experienced life settlement broker. At IMS Settlements, we can help you determine whether a life settlement is an appropriate option for you — and help you net the highest lump sum for your policy. If you have questions such as, “Can a term life insurance policy be sold?,” contact us today for a free evaluation of your life insurance policy.