UNITED STATES—Are you feeling burdened by your insurance premiums? Whether your payments are for life insurance or anything else there are always other options to get value of life insurance. You can even change insurance providers if you feel that’s best for you and your situation. Having said that, you might prefer to sell your permanent life insurance policy and be completely free of your premiums whilst getting a bit of extra cash that’s more than your value cash surrender. In fact, you’ll receive more money than your cash surrender value which is normally a pretty interesting deal and allows you to access the cash value.
Pros of Selling Life Insurance Policy
First, you have to confirm that you’re eligible to sell your whole life insurance policy. This usually implies being over the age of 65 and having a universal life insurance policy that’s at least older than 2 years old. Of course, there are many different types of life insurance that might appeal to various buyers. Regardless, it’s up to the buyer to decide if it’s worthwhile for them. Nevertheless, here are some of the benefits you can expect:
- Receive more cash than your cash surrender value
- No longer responsible for your premiums
- A safe financial transaction
Receive more cash than your cash surrender value
Perhaps you’ve already decided that a life insurance policy is no longer for you. This often happens when people get towards the senior stages of life and family members have either passed on or are no longer in touch. Then, rather than pay something that won’t benefit your family, you could get the cashback, so to speak, on your long-term life insurance.
It’s a bit more complex than that though. Basically, you’ll receive more than your cash surrender value from your insurance company. This value is calculated from the total payments made to your policy. The reason you’ll get more is because life settlement companies are willing to pay you to not cancel your policy. Instead, you pass your death benefit onto them.
No longer responsible for your premiums
If you’re at your wits’ end trying to figure out how to pay your life insurance premiums then selling your policy might be the perfect plan. You’ll get some money in return for no longer having a monthly payment to make. Of course, you have to consider that your family will no longer get any death benefits but in some cases, that’s perfectly acceptable.
A safe financial transaction
With all the uncertainty in the world these days, selling life insurance policies has become one of the safest financial transactions. Of course, it’s not for everyone but depending on your life circumstances today, you could benefit from healthcare expenses. You could even spend a more enjoyable retirement that’s beyond the surrender value cash of your life insurance.
Cons of Selling Life Insurance Policy
Sadly, nothing is perfect in this world and you have to weigh up the pros and cons for your particular situation. Clearly, life insurance brokers or agencies can support you through the decision-making process. Regardless, you might want to consider the following key points:
- Lose your death benefits
- Potentially pay tax
- Lose certain benefits
Lose your death benefits
As you can imagine, once you sell your policy then your benefactors won’t get your death benefits. This might not be an issue for you if your benefactors have already passed on or if perhaps the relationships have changed. After all, life involves constant change and you never know what might happen with people around you.
Potentially pay tax
One factor that might put you off is tax. Although, settlements up to the cash basis are not taxed and only anything above that value and up to the cash surrender value are. When you sell to life settlement companies though, you tend to receive more than your cash surrender value. In that case, you can expect to pay capital gains tax. The overall amount will depend on your policy, surrender cash value and selling price. Although, the experts will do this calculation for you.
Lose certain benefits
It’s worth remembering that proceeds from a life settlement are considered an income. That means that you could potentially lose access to certain senior citizen benefits. Furthermore, some housing is only available with certain income restrictions therefore potentially putting the roof over your head at risk. Don’t let this put you off though and just explore the details with your life settlement broker.
Parting Takeaways on Selling Life Insurance Policy
Nothing in life is black and white. This means that there are both pros and cons to any decision. You, therefore, have to make it work for you and your situation. That might sound strange when referring to a life insurance policy but even that can be tailored for your needs. You simply need to talk to the right experts, get a valuation for the value of your policy and consider how much money you need to suit your circumstances. Then, the good news is that if you do sell your life insurance, it’s a relatively seamless process, with the help of a broker or an agency, and you’ll have your cash within 3 to 4 months to support you in your current situation. After all, life insurance is all about making our lives and our families’ lives easier so let’s make it work for all of us.