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Is it a viable option to sell your life insurance policy? words Alexa Wang
Selling your life insurance policy often referred to as life settlement, can be a great way to get your hands on a lump sum amount of cash when you need it.
It basically involves you surrendering your life insurance policy in return for a smaller percentage of the eventual payout. The investment team who purchase the policy from you will then continue to pay the monthly premiums and will cash out on the policy in the event of your death. Is selling your life insurance policy right for you? We’ll take a look at some of the key factors to help you make your decision.
Who is eligible for a life settlement?
The main factor in gauging eligibility for a life settlement is life expectancy. Typically, for your policy to be considered as eligible for most investment companies, sellers will have a life expectancy of fewer than 20 years. There are also stipulations as to the value of the policy, with most investors looking for values of over £50,000. There are other factors that should be considered, details of these can be found online.
Reasons to sell your policy
There might be many reasons why you would consider selling your policy. It could be that you need to raise cash quickly, maybe you need to help your children now, or perhaps you have lost a partner and need help to get by financially. There are lots of reasons why you might need an immediate injection of cash. For many who sell their insurance policies, they have simply come to the conclusion that they no longer need a payout in the event of their death. Their families might well be financially secure and so they feel that they should be able to make use of the money whilst they are still alive. Read our guide to what insurance you actually need to help you decide if this is the case for you.
What is your policy worth?
When you sell your policy you will generally receive an amount somewhere between the cash value of surrendering your insurance with your provider and the full payout amount that you would expect following your death. The value of life settlements do vary, so speak to a provider to find out exactly what they could offer you.
Are life settlements safe?
Financial institutions are bound by regulations so by surrendering your policy you should never be left worse off. You just need to remember at all times, exactly what you are giving up after your death and weigh up if what you are being offered now is worth what your family will be losing out on when you are gone. There is information online as to how life settlement firms are regulated.
How can I find a buyer for my life insurance policy?
The key thing here is to do your research. Head to the internet and find out what firms are out there that are willing to buy your policy. Shop around, firms will offer you different amounts for your policy so speak to a few different ones to ensure that you get the best possible deal.