Receiving a lump sum in exchange for selling your life insurance policy can provide quick access to cash and a means to alleviate outstanding debt.
A life settlement is a cash payment in exchange for selling your life insurance policy. Selling a life insurance policy can be a financial solution to help alleviate debt or maintain a higher quality of life. If there is no longer a need for the policy, if there are no beneficiaries, or if the policy premium becomes too expensive to pay for, the policyholder can sell their life insurance contract to a third-party buyer.
You must meet certain criteria to qualify for receiving a life settlement. Such qualifications include:
The higher the face value of your policy, the more appealing it will be to potential buyers.
There are many reasons policyholders may choose to sell their life insurance policies. One of the most common includes preparing for death when diagnosed with a terminal illness. While life settlements are typically given to candidates 65 years or older, terminally ill candidates have access to a second option: viatical settlements.
A viatical settlement, similar to a life settlement, is also a financial solution policyholders can use to help pay for medical expenses and treatment. However, monetary disbursement can be given to someone of any age who is expected to die within two to four years. The intent of this settlement is to leave families with as little debt as possible after the insured’s death, though policyholders can use the settlement money however they choose.
Viatical settlements can help to ensure families are left with little to no debt from health expenses, hospice care and ongoing medical treatment.
Though life settlements can also help to alleviate debt, policyholders can use the disbursed lump sum however they choose. Typical life settlements provide more flexibility and are meant for individuals with an extended life expectancy. Be sure to consider your options when pursuing a payout for life insurance policy.
Life settlements are becoming increasingly popular options for seniors looking to liquidate their life insurance policies. Consider these factors to determine if receiving a life settlement is a good option for you:
Prior to pursuing a life settlement, policyholders should consider consulting an experienced life settlement broker or a life settlement provider. While both are thoroughly experienced in selling life insurance policies, brokers and providers are different. Providers purchase life settlements, and policyholders can sell their policies directly to them. Brokers are able to solicit bids on your policy to help you get the highest sale price.
Financial professionals play an important role in protecting their clients’ assets and providing reliable financial options for selling life insurance policies.
When you find a broker or provider to handle your life insurance policy, they will take the next steps in selling your policy:
Brokers will then bid your policy for potential buyers to help provide you with the highest sale price. If you receive an offer, you have the option to sell your policy.
Once you’ve sold your your life insurance policy and ownership has been transferred to a buyer or investor, you will be able to receive the life settlement disbursement. It is common for policyholders to receive a lump sum in exchange for rights to their previous life insurance policy. This full payout can help to pay for larger debt, incidentals and commission fees for brokers and lawyers. The lump sum option provides the most flexibility and freedom over your finances.
Policyholders also have the option of receiving a structured settlement, or a series of structured income payments over a period of time. This payout option provides less flexibility, but ensures a steady revenue stream that could add to a retirement fund or pay for ongoing medical expenses.
We know how difficult it can be to understand life settlements, sell your life insurance policy and select a trustworthy and honest provider. Our call center staff is always happy to take your call and answer your questions about life settlements. If your premium payments have become a burden and you’re ready to select a provider, we can help with that, too. Our team will do what we can to help you maximize the value of your life insurance policy.