Should Seniors Sell Life insurance For Cash Life Settlements?

Can you sell unwanted life insurance policies for cash? Well, some people can, and this has become a popular option for older people with some policies they do not want any more.

The investors who buy the life insurance will be set as the new beneficiary. They also offer to make premium payments that are still owed. In return, they hope to collect on the death benefit. The insured person, on the other hand, gets paid now.

This can be an attractive option for many senior citizens who need money to live on, and are not as concerned about heirs who would get a death benefit later.

In the past, a person only had a couple of choices when they did not want to keep a policy. They could simply stop making premium payments and let the contract lapse as unpaid. Or they could surrender it to the original insurer, and settle for the cash value. This cash value was usuallly a small percentage of the contract’s death benefit though.

But now, life settlements are being promoted as a way to get paid well for a policy.

Who gets to consider life settlements?

Though I have seen younger people being considered, most of the time the insured person must be at least 70.

Types of Life Insurance That Work

In addition, the policy must be permanent. Whole or universal life insurance would qualify. A term policy may be accepted if it has guranteed option to convert it to a permanent policy.

People with term life shold make a deal when there is still quite a bit of time left on their policy.

Is this a good idea?

Not everybody will want to sell their life insurance, but some people can really benefit.

It helps if the beneficiaries are onboard. Those beneficiaries will give up the eventual death benefit when their loved one passes away. But many grown children are happy because that same loved one has a way to raise money for their current needs.

Life settlements are also considered by businesses. The company may have covered an owner or key man who does not work for them any more. They can use the policy to raise money, rather than paying a premium on a person who does not work with them any more.

How much are these policies worth?

Policy owners will probably be able to shop a market with many people competing for the right to buy. Some can get a pretty decent percentage of the face value (death benefit). It is not impossible to find offers of 1/2 or more of the face value.

How To Find Out More About Life Settlements?

If you are interested, you can find brokers who will be able to help you find competitive cash offers.

I cannot tell you if you should sell your life insurance policy, but it is certainly something qualified people should think about.