It is a long term financial commitment to purchase a Permanent Life Settlement policy. But, when you no longer need your life insurance, or you are not able to pay the premiums, it is possible to sell it. Here’s how it works, and here’s how to protect yourself, as we’ve covered for you below.
The seller of a life settlement policy is usually over 65 years of age. However, the Life Insurance Settlement Association also notes that it is also possible for younger people to meet certain medical conditions. A universal life insurance policy and death benefits that exceed $100,000 are the most desired options, but you can also sell smaller policy amounts and term-life policies.
Generally speaking, this type of policy is usually lumped together and owned by insurance companies, banks or other institutional vendors. However, you can find individuals who are their masters as well. If you have an incurable disease and your estimated lifespan is 24 months or less, you can sell it under Viatical Settlement. You also need to know that surrendering your policy is different as you approach your insurer to terminate the policy. When you do this, you get a portion of the policy’s cash value if there is any left over.
How does this agreement work
Any transaction surrounding this type of settlement can happen through a provider or broker. The Life Insurance Settlement Association states that there are two main differences between these options. First, a broker will receive multiple bids on the same policy in an attempt to get the best price for sale. Brokers are almost always the ones who handle the sales. Providers are the ones who buy settlements. It is possible to bypass the broker and go directly to the provider to sell your policy, but you are not guaranteed the best price this way.
When you choose a provider or broker and agree on a price, there is a normal process by which you will sell your policy. It may not always go this exact way, but it’s a good outline of what you can expect.
- You will give all the details about your life insurance policy and your medical records to the provider or broker to start the sales process.
- If you go through a broker, they will start buying potential buyers for your policy. Any buyer will look at your medical records and calculate how long they think you will live based on the information you provide.
- You will start fielding proposals for your policy. If you find one you like, you can accept the offer.
- Once you sell, it makes the new buyer the owner of the policy, and then they will start paying premiums. It is also possible that this buyer can easily resell the policy to someone who will take over the premium payments.
- When you sell, you will need to check in with the buyer from time to time to confirm that you are still alive. For example, you may receive a one-time postcard from a buyer that you must sign and return. You can discuss how you want to investigate with the buyer or broker before selling your policy.
- When you die, the policy owner will receive the death benefit.
Important things to ask yourself before selling your policy
You are likely to get a good deal on this policy. However, asking yourself the following questions can ensure that you get the best possible price:
- Might you still need coverage down the line? If you can afford the settlement premium amount and have people who are financially dependent on you, you may be better off holding on to the policy instead of selling it.
- Do you have other ways to pay your premium? If your premium is slowly starting to become unmanageable, there are alternatives available. For example, you can take out a loan from your policy or consider reducing how much you will pay in your death benefit to reduce premiums.
- Can you trust the buyer and the broker? Look for a broker who has the proper license to use your state’s department of insurance. Plus, know how much personal information the buyer will have about you in your medical records. Do not work with any buyer or broker who is hasty in your decisions.
how to sell my life insurance policy
When you’re wondering how to sell my life insurance policy, there are a few things you can do to protect yourself. These things include, but are not limited to:
- Do not respond to any life insurance settlement solicitation. Going through an insurance agent or your financial advisor is always a better option. Ideally, they would have a license to make a life settlement.
- Wait to sell until you’ve got several offers on the table. A broker can buy this policy on your behalf to give you a better understanding of what your policy is worth.
- Do some research on any potential broker you are considering working with. Look through the state insurance department and check the status of complaints and their licenses. You can get the department’s contact information from the National Association of Insurance Commissioners during this process.
- Remember that you can still keep your policy even if you have bids on it.
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Author: DLM Editor
Life Tips and Hacks for Life Happiness and Prosperity.