People have asked for years “Can I sell my life insurance policy?". Now there is a real market, with real brokers and buyers for people who do not want their life policy anymore or they just want to see what it is worth if sold. These are called Life Settlements and they have added a great service to the insurance market - for both sellers, buyers and the companies who specialize in the selling of these issues.
The financial and insurance markets always seem to find a way to create the right products for the right time. I remember when Universal Life and VUL issues were the new hot thing. The life settlement market was something that was needed. There are billions of dollars worth of policies in the market that either not appropriate or out of date for the owner due to various factors or they were never the right life policy to buy in the first place. The point is, there are options now for these people and the only negative is that most people who own these and could use a cash settlement do not even know a market for selling an insurance policy exists.
Types of policies used
This is a growing list of the types of insurance that can be used for life settlements when looking to sell.
Whole Life - This type is a contract that insures a person for their “whole life" or age 100, whichever happens sooner. It can have cash value. It is a widely held type of insurance that works well for people selling or doing a viatical settlement due to terminal illness.
Term - If the policy is convertible, these can work if the face amount is high enough
Universal Life, VUL, and Adjustable Insurance are also used.
There are pools of investors who look to purchase these insurance policies and provide the cash settlement to the seller. This market continues to grow which is a benefit to someone looking to sell their contract. With more buyers and more companies growing everyday in the settlement and viatical market everyday, the price is more reliable and the seller can be assured that they are seeing more of the buyer market than ever before.
Reasons to Sell
As mentioned in the introduction, their are many personal reasons why someone would want to look into selling their life policy.
Premiums To High - If the policy has become less needy and the premiums have become a problem, a person would have normally just let the policy expire, which is something that someone should never do now obviously. Testing the life settlement market before letting the policy lapse - even with high premiums is strongly advised.
Quality Of Life (Would like Cash) - A life insurance issue is meant to provide security for your family or significant others in case of your death or to provide income if it serves an an annuity type issue. But if quality of life requires selling or transferring insurance or investing assets for cash, this is something to consider strongly.
Terminal Illness - The worst of the reasons, but at least you and your family have the option with cashing out and having a market where you can sell the life insurance.
Policy is No Longer Needed - Simple as that. Times and circumstances change. Rather than letting the issue expire, there is a cash settlement market to go to.
All transactions through reputable companies are completely legal and formal. The person looking to sell will have full contracts (similar to a closing on real estate), cash payout details and other legal issues disclosed.
Face amount minimums and age can effect the market on these transactions. Many of these settlements are well into the six figures. You can get free quotes to check on what your policy is worth.
Life Insurance Settlement Quote
Nick Hunter is the President of American Investment Training. One of his company services is specializing in assisting insurance holders on how to Sell a Life Insurance Policy through the secondary market. His company works with major insurance companies throughout the world.