Should I sell my life insurance policy? In many situations the answer is yes. While you previously may not have been familiar with this option, there are a variety of situations where it may make financial sense for you to sell all or a only a portion of your life insurance policy instead of cancelling it for its cash value or holding it until your death.
Selling an existing life insurance policy to a third party is called a life settlement or viatical settlement. The original owner sells the policy for a lump sum that is more than the cash value of the policy but less than the death benefit. The new owner then becomes the beneficiary of the policy and takes over the premium payments. Usually these settlements involve whole life or universal life policies, but selling your life insurance policy is possible if your term policy can be converted into one of those types of coverage.
In lieu of selling your entire policy you may also have the option to only sell a portion of your policy while retaining a portion of the death benefit coverage.
Here’s a closer look at why you may want to consider selling your life insurance policy, and the considerations to keep in mind when making that decision.
Why Consider a Life Settlement?
Chances are that you purchased your life insurance with the intention of providing for your family after your passing. If your life circumstances have changed, it may be more beneficial for you to negotiate a life settlement instead. For example, you may no longer want or need a large life insurance policy if you bought it to protect your children and they’re now financially self-sufficient adults.
Or perhaps the policy premiums have become more than you can afford. Some types of insurance premiums increase with age, which may make the policy prohibitively expensive. Or maybe you simply want a lump sum to use for health care, living expenses or travel. By this point, you are likely retired and may prefer to have the money now while you can use it. Regardless, there are a variety of reasons why you may decide, “I want to sell my life insurance.”
Considerations to Keep in Mind When Choosing a Life Settlement
Before you decide to sell your policy, however, consider whether you still need it to provide for family members after you pass on. If you’re having trouble meeting the premium payments, talk to your agent about ways to make them more affordable, such as reducing the policy benefit.
If you do decide to move forward with a life settlement, consider using an experienced life settlement broker or company that specializes in this area. IMS Settlements will help you confirm that a life settlement is an appropriate option for you — and help ensure that you receive the highest possible payout for your policy.
We can tell you whether your policy may qualify for a life settlement, determine the potential value of your policy (considering factors like the payout benefit), and solicit bids from life settlement providers that purchase these kinds of policies. With more than 50 years of combined life insurance industry experience, we work with dozens of life settlement providers to help policy owners receive the highest amount possible for their life insurance. Contact us today for a free evaluation of your life insurance policy and to learn how we can help you.