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.