Plenty of people have life insurance policies these days, as some form of long-term coverage. However, many people, once they create their own families, are also looking to make sure that their loved ones will be taken care of financially, in case anything happens to them. And as children grow up, and spouses grow old, and everyone becomes financially independent, many believe they don’t need a life insurance policy anymore.
If you’re one of those people, you might not be aware that you can actually sell your life insurance policy for a cash value, and there are plenty of great life insurance companies that you can sell them to, companies like Uplife.
You can get several different options if you decide that you no longer need your life insurance policies including:
Surrendering your life insurance policy for the accumulated cash value. As with all insurance policies, you make premium payments, which are building the cash value of the insurance. Once a life insurance policy has accumulated enough value, you can start borrowing against it. And if you decide to surrender your life insurance policy, you can receive a check for that accumulated cash value.
You can also allow the life insurance policy to lapse. If all you want to do is stop paying your premiums, you can choose to stop paying the future premiums and then allow the life insurance policy to lapse. However, this is an option that won’t get you any amount of cash, and your life insurance policy will terminate.
Finally, as a policyholder, you can sell your policy.
Each one of these options that are available to you come with their own considerations. You have to understand the way that each option works before you can decide which one is best for you, and the situation you’re in. Additionally, you should know that if you decide to choose any one of those options, the life insurance you have is no longer going to provide your beneficiaries with a payout.
Why Sell a Life Insurance Policy?
There are two types of solutions when it comes to life settlements. There is the viatical settlement and the traditional life settlement. There are similarities and differences between both options.
Differences and similarities between viatical settlements and traditional life settlements
For starters, the viatical settlements are mainly for people with a terminal illness. Although it has a flexible age requirement, the life expectancy still has to be between two and four years to make the eligibility.
On the other hand, with traditional life settlements, the main requirement is that you have a life insurance policy that has a value of $100,000 at minimum, you’re over 65 years old, and your life expectancy is less than 15 years. These types of settlements are mostly used when selling a life insurance policy.
Before you can decide which type of settlement is best for you, you have to evaluate the situation you’re in and your health. Considering that both viatical settlements and traditional life settlements require your life insurance policy to be a permanent form of life insurance, you can get a substantial cash payout with either of them. However, this is not an easy decision to make and you should understand all of the implications.
What selling a whole life insurance policy means
The first thing you should know is that your beneficiaries are not going to receive a payout. Whoever buys your life insurance policy will assume all of the responsibility for the policy, including making the premium payments, as they become the policy owner. Upon your death, your beneficiaries will receive the death benefits.
While a viatical settlement usually isn’t taxed, the traditional life settlement is frequently subject to taxation. He should talk to a tax advisor who can help you understand all of the taxes you should pay, to make the best decision and get a decent amount of money.
Finally, the life settlement broker that helps you with the sale of your policy for cash, and guides you through the settlement process, will be receiving a commission. With the help of a broker, you’ll be guided throughout the process of selling your life insurance policy for cash, which is usually a percentage of that sale, and it’s usually deducted from the cash payment before you can receive your check.
How to Sell a Life Insurance Policy?
The first step in selling your life insurance policy, after you have researched all the options and have learned everything you can about them, is to start using a Life Settlement Calculator. There are plenty of these available online, and all you have to do is enter some basic information about yourself. That includes the value of your policy, your age, and similar information to get an estimate on how much you might receive in a settlement.
The next step is filling out an application form. You have to provide some basic demographic information, the status of your health, and some basic information about your life insurance policy. You’ll also be signing a medical release form and some other forms that will help you release your insurance information.
Next up is the documentation where the company will gather all the necessary information there is, related both to you and your life insurance policy based on the information you provided in the previous step.
Then, the company will review all of the information they’ve gathered, along with all of the information you have provided, and see how much your life insurance policy is worth. You should know that the company might decide that it’s not interested in purchasing your policy.
If the company decides on purchasing your life insurance policy, you will receive an offer for it. It’s up to the company whether the offer they make is negotiable or not. You can always walk away from the sale if you don’t want to accept the offer the company made.
One of the last steps is finalizing the sale of your life insurance policy, and completing all the necessary documentation. During this step, all of the documents will likely need to be signed by you, along with several other people. Once you’re finished with the step, you should be receiving a timeline on when you’ll receive the payout.
And finally, the last step is getting the money from the payout transferred to your account. You might receive your payout in several payments over a period of time or a single lump sum. You can decide whether you want a lump sum of cash at face value, or get several payments.
There are a number of steps that you have to take in order to sell your life insurance policy for cash, which takes anywhere between a few weeks to a few months.