The Ultimate Guide to Selling Your Life Insurance Policy

The reason most people buy life insurance is to offer financial protection to loved ones in case they pass away. But what if the loved ones you want to protect are now financially stable, all your debts are paid off, and you have more than enough to enjoy your golden years? Do you still have to pay the regular premiums that you’ve been paying for since you had your first baby twenty or thirty years ago? The answer to that is a simple No. Gone are the days when the only option you had is letting the policy lapse and get an insignificant amount of cash back or continue paying the premiums, as you now have a third option of selling your life insurance. If you are finding out about this option now, then you are in good company because below is all you need to know about it. 

How Does This Work? 

Most people are often puzzled by this option which is why we are clearing the air once and for all. The process is called a life settlement, and it involves transferring your policy to a life settlement company. If you are wondering why it is possible to sell my life insurance policy, then we will clarify. In the eyes of the law, your policy is perceived as a real asset only that it is in the form of cash. Hence you don’t have to worry as it is entirely legal. 

In this process, a life settlement company will offer to purchase your policy in exchange for cash. The company considers the following factors 

– The value of your policy 
– The cost of the premiums 
– Your health and age 

The factors listed above are usually the determiners of what you get. However, the lump sum of cash you get is slightly lower than your policy’s value but higher than what the insurance company would have given back if you were to surrender the policy. 
Benefits of selling your policy 

The Sale Gives You Extra Cash 

Whether you are financially stable, or you have enough to keep you going, getting a life settlement gives you extra money to spend. This you can use to pay for your nursing home care instead of being dependent on others, start a business or even take a vacation. Once the life settlement company buys off your life insurance policy, it automatically assumes the role of paying premiums for it. That means you get cash and be merry on your way, and let the company do whatever it wants with your policy. As a baby boomer, you want a comfy retirement life too. You can use the lump sum you get to pay for your home’s repairs, pay off debts, or purchase new furniture or anything that you feel will make your retirement life better. 

Should I Be Worried? 

While the benefits are evident, most people shy away from selling their policies because they feel that the life settlement company might send a James Bond type of hitman to take them down, so it can take the benefits earlier. Well, we are here to set the record straight. When you sell your policy, you do not deal with the buyer directly. A financial institution often oversees the transaction. Additionally, most life settlement companies purchase your policy alongside many others which makes it impossible to find out who you are, or even direct their focus to you, hence you don’t have to worry about your safety.

 

Factors that Affect your Auto Insurance Premium Rates

Ever wondered why you, your spouse, your first born child and your neighbor pay different auto insurance premium rates? Also, why is it that one insurer will give you a high premium rate while another one goes a bit lower? If you’ve ever found yourself puzzled by this factors, then you’ll be glad to know that the auto insurance premium rate you are paying now isn’t just a random sum quoted by your insurer based on how affluent you look. Instead, it is a well-calculated sum which is based on various factors that insurers use to determine your risk factors. Some of these factors you can control and some while others you cannot, 

Age and Gender 

Age is one of the main factors that insurers use to determine the risk factor of anyone who seeks to be insured. Unfortunately, this is a factor that you have no control over. Drivers at the age of 25 and below often get hefty insurance premium rates as they are perceived by most insurers as reckless, hence causing their risk factor to be high. For instance, even though they only make up 15% of the general driving population, drivers at this age are often held accountable for 30% of auto accidents, thereby causing their insurance premium rates to skyrocket. Drivers at the age of 30 and above, however, get affordable rates as they are deemed to be more careful. Gender also affects these rates. Female drivers at the age of 25 and below are two times more likely to get affordable rates than their male counterparts as most insurers deem them as careful. However, as they age, the tables turn, and males get cheaper rates. Nevertheless, on average females pay less than males. 

Your Driving history 

Your performance on the road is yet another factor that determines whether you go home smiling or frowning. If you’ve had a history of being arrested, many tickets and violations and been involved in multiple accidents, then there is no doubt your premium rate will break your budget. On the other hand, if you have a clean driving history, then you’ll get a much affordable rate. Additionally, the number of years you have been on the road are also of the essence in determining your rate. Drivers who have been on the road are deemed more experienced thus less likely to cause accidents while those who are newbies are considered to have a high-risk factor, therefore, causing them to get expensive rates. Therefore while shopping for your auto insurance Easton pa be sure to keep all these factors in mind, and those that you can control, do something about them so you can get an affordable rate. 

Location 

Where you live is yet another uncontrollable factor that affects your premium rates. If you reside in a densely populated area where traffic is high, then you are more likely to get slapped with a high premium rate as the stakes of you getting into an accident are quite high and vice versa. Therefore, premiums are often high in big and metro cities where the traffic is on the upper side. Besides traffic levels, the regulations in your town also affect your premium rate. For instance, some states require drivers to have unlimited Personal injury protection coverage. In such states, drivers pay even higher premiums as the costs of this coverage are passed to the insurer. Also if you reside in an area prone to natural disasters such as wildfire, hailstorms, and floods or where crime rates are on the rise, then expect insurers to slap you with a hefty auto insurance premium rate. 

 

What is an Insurance Policy?

When looking to purchase any type of insurance it is important to have a basic understanding of exactly what is insurance. Essentially, insurance is a legal contract between two parties, the insurer and the insured. The insured will receive financial protection in accordance with the specific terms of the insurance contract from the insurer, which is usually an insurance company. The insureds pay premiums to the insurance company which allows the insurer to pool the risks of the insureds’ risks to enable more affordable payments. 

Hedge Against Risk of Financial Losses 

Insurance policies hedge against risk of financial losses of varying sizes. Especially those that result from damages to the insured’s property or bodily injury to the insured. The policy may also cover liability for injury or damage suffered by a third party due to the actions of the insured. 

Different Types Of Insurance 

There are various types of insurance policies which are available for purchase by any individual or business. The most common insurance policies for individuals are auto, homeowners, health and life. Usually individuals living in the United States have at minimum one of the above-mentioned types of insurance. Auto insurance is legally required for all drivers. 

Insurance Polices for Businesses 

Businesses face certain types of risks which are not usually faced by individuals. Also, the risks businesses face can be specific to the particular type of business. For instance, a fast food eatery needs insurance which covers injury or damage related to use of a deep fryer for cooking. In contrast, a car dealer is not at risk of this particular risk but will require coverage for injury or damage occurring during test drives. Other insurance policies that address specific needs of particular types of businesses are coverage for medical malpractice, kidnap and ransom and errors and omissions insurance, also known as professional liability insurance. 

Components of an Insurance Policy 

There are three essential components of any insurance contract: the premium, the policy limit and the deductible. It’s important to understand these. Having a a comprehensive understanding of these components will help in choosing the best policy for your specific situation and needs. 

Premium 

The premium for an insurance contract is the price the insured pays to obtain coverage against risk of loss or injury by the insurance company. Usually the premium is paid on a monthly basis. The premium amount paid is determined based upon the risk profile of the individual or business. One of these factors used by an insurance agency perth amboy nj to determine a risk profile is credit worthiness. 

Policy Limit 

The maximum amount an insurance company will pay under an insurance contract is known as the policy limit. The policy limit may be set for each period or per injury or loss. It can also be set for the entire lifetime of the insurance policy, which is known as a lifetime maximum. Usually, higher limits will require larger premium amounts to be paid by the insured. 

Deductible 

Generally an insured will be required to pay a specified amount from his or her own funds before an insurer will pay a claim. This amount required of the insured is known as a deductible. A deductible is used to deter large volumes of insignificant and small claims which can be cumbersome and costly for an insurer.