Did you know that you can sell a life insurance policy you hold (providing you meet the criteria) and release a lump sum amount of cash? If you didn’t, we are here to tell you a little more about the process and help you decide if selling your life insurance policy is the right decision for you.
What Is A Life Settlement?
In short, selling your life insurance policy in a life settlement sale involves you accepting a sum of money for the policy (usually less than its face value) and handing it over to the buyer. The investment team who bought your life insurance policy will then continue to make payments on your behalf and cash the policy in when you die.
Who Is Eligible For A Life Settlement?
Not everyone is eligible for a life settlement. Typically, much of it depends on your life expectancy, with buyers usually looking to purchase policies from individuals who are over 65, have a chronic illness and hold a life insurance policy worth more than £50,000.
The bottom line is that if you are young and healthy, your life insurance policy won’t be as attractive to potential buyers.
Why Sell Your Life Insurance Policy?
There are many reasons why you might want to sell your life insurance policy. For example, maybe you need to raise a chunk of cash quickly, to help your children purchase something important or simply survive financially following the death of a partner.
In fact, widows and widowers who have no children are prime candidates to sell their life insurance policies because they do not need a payout in the event of their death.
Individuals whose families are financially secure are also likely to benefit from a life settlement, a decision that would enable them to make the most of their money while they are still alive.
It may be the case that you can simply no longer afford your policy premiums, which makes selling it a more attractive alternative to forfeiting it.
How Much Will You Get For Your Life Insurance Policy?
Generally speaking, when you sell a life insurance policy you can expect to get a sum somewhere in between the cash value of surrendering your insurance and the full settlement amount that would be paid out in the event of your death.
Things To Consider
The main point to consider when you are thinking of opting for a life settlement is what you would do should your circumstances change. Once you have sold your life insurance policy, it’s gone and you and your family will no longer benefit from it in the event of your death.
Therefore, if your and your family’s circumstances are likely to change in the future, think carefully before accepting a life settlement.
Weigh up what you will receive from the sale vs. what your family will forfeit in the event of your death and make an informed decision accordingly.
There are plenty of firms out there who purchase life insurance policies. The key is to shop around and get multiple quotes to ensure you are getting the best deal possible.
I joined Premier Choice Group as a Healthcare & Protection Consultant in 2017, where I now look after the needs of over 200 clients nationwide. Prior to joining the Premier Choice Group, I worked for a large Private Healthcare Insurer, VitalityHealth, and managed SME and Individual clients across the country.