There are numerous institutions that will BUY YOUR INSURANCE POLICY from you.
These transactions are called Life Settlements and they have made insurance policies, even some term policies, more of an asset like they've never been before.
A life settlement is the sale of an existing life insurance policy to a third party for more than its cash surrender value but less than its net death benefit.
Convertible term insurance can also be sold which would enable the policyowner to get money for the policy as opposed to just canceling or lapsing policy and getting nothing back.
This is a total win for the term insurance policyholder that no longer needs or wants the coverage.
Can even sell a term life insurance policy for cash
In the past, if an owner of a life insurance policy no longer needed or wanted their life insurance policy, he or she could cancel their permanent policy and receive the policy’s cash surrender value as a lump sum or cancel or lapse a term policy and get absolutely nothing back.
There are now institutions that will competitively bid on the purchase of an existing policy taking into account the insured’s current age, state of health and the amount and type of insurance policy.
That’s right, if the policyowner qualifies, he or she may be able to "sell" their life insurance policy for more than the cash value if there is any.
Again, this is a complete win for the term insurance policy holders that no longer need or want the coverage. This market has created a potential value to term policies that didn't exist prior.
Avoid agents that claim term life is a commodity
Don’t use any agent, broker or website that still claims term insurance is only a commodity and you should only buy the lowest rate possible.
If you only focus on price, you may not be able to sell your term life insurance policy for cash someday.
If you’d like to have the option to sell your term life insurance policy someday, your policy usually must still be convertible or extendable to permanent insurance.
It’s important for you to find out how long your term policy is convertible, preferably before applying, if you may be interested in selling the insurance someday.
The ideal term policy to buy is one that is convertible for the full 10, 15, 20, 25, 30 year or longer guaranteed level term period from an insurance company that offers good conversion products.
How Do I Sell My Life Insurance Policy
The way Life Settlements works is that the institution that buys the life insurance policy becomes the new owner and beneficiary of the insurance policy. They pay all future premiums and they collect the death benefit when the insured dies.
The right way to sell your policy to get the highest offer is to complete an application and then make certain that your case is shopped to every potential buyer in your State.
Some of the big life settlements providers that buy policies are:
Coventry First, Maple Life Financial, Berkshire Settlements, Institutional Life Services, Life Trust, Montage, The Settlement Group, Abacus Settlements, Life Equity, Life Capital Group, APEX Settlement Group, Q Capital Strategies, Life Policy Traders, Eagil Life Settlements, LifeRoc Capital, Magna Life Settlements, SLG Life Settlements, Lighthouse Life Solutions, Berkshire Settlements, Habersham Funding, Credit Suisse, RA Jones Financial.
You will get less money by dealing direct
While you can deal directly with some life settlements buyers, dealing direct is a sure way to get ripped off!
For example, we recently gained a client that was about to "sign on the dotted line" with a direct buyer to accept an offer of $40,000 on sale of his term policy that he was going to cancel.
We shopped his case, negotiated with top bidders and he walked away with $87,500. More than double what the direct buyer offered.
Another more extreme case was for a female with a large Universal Life policy who was offered $85,000 from a direct buyer. We shopped her case and got her offer of $577,000 or more than 6 times the direct offer!!
Competition will 100% definitely make for higher offers!!
Can You Sell Your Life Insurance Policy
Ideally, you'll need to be age 70 or older to get an offer on the sale of your policy.
Younger people may be able to get an offer, but they'll really need to have some more significant health issues and/or a policy with a low cost to age 100.
Your policy will need to be more than 2 years old, or out of the contestability period, to be sold.
Ideal policy amount is $250,000 or higher, but there are some buyers that will consider policies as low as $100,000.
Reasons you may sell your life insurance policy
- The business or personal life insurance policy is no longer needed or wanted
- To pay for healthcare or long term care costs
- Premium payments have become unaffordable
- Considering lapse or surrender of the policy
- Change in estate planning needs
How much do you get for selling your policy
The value of a life insurance policy is determined by a number of factors, including the age and medical condition of the insured, type of insurance policy, rating of the issuing insurance company and amount of premium payments to keep the life insurance policy in force to age 100 or 105.
Even if there is no way you will live to age 100 or 105, this is the pricing parameter that all buyers are using now.
According to the Life Settlement Association, the average life settlement "settles" for an amount equal to about 20% of the policy amount.
Average life settlement offer is meaningless
We just did a life settlement for a 79 year old male who ended up getting 60% of his policy amount, and did another for a 72 year old male in good health who got 2% of his policy amount.
Both of the above planned on cancelling their policies with no cash value, so the offers were accepted and getting any amount of money back, compared to getting nothing is a win!
Life settlement calculators are NOT accurate
We have seen and used the life settlements calculators online, and none that we have tried are accurate. They will err on the high side to get you to provide your information.
Bottom line is it is impossible to know in advance the amount you will receive on the sale of your policy as there are too many variables involved.
Do NOT sell policy if you have terminal illness
It is our recommendation that you DO NOT sell your policy if you are diagnosed with a terminal illness unless there is no possible way you or family members and/or friends can afford to pay for it!
REASON: Highest offer we've ever experienced or have even heard of in life settlements industry was 70% of the policy amount.
Even getting to 70% is a "tough negotiation" as all buyers know that "miracles" can happen and life expectancies from terminal patients do not always pan out as expected.
Verify if your policy has a terminal illness payout clause
Most new life insurance policies have an option to accelerate payout of a portion of your policy amount if you are diagnosed with a terminal illness.
Depending on how old your policy is it may not have this terminal illness payout, but you 100% need to verify this with your insurance company.
DO NOT accept a lower life settlement payout unless you have absolutely no choice!
Bottom line on selling your life insurance policy
If you deal directly with any buyer, you will not get the best offer!
We can shop your case with all of the licensed life settlements providers to get offers and then negotiate to get you the best offer possible. We'll handle all of the paperwork and we'll obtain all necessary medical records..
DON'T wait until your policy is about to lapse to attempt to sell it. Hard deadlines do not help the process of getting best offer!
Can take 2 months or more to shop your case for best offers!
To effectively shop for best offer can take 2 months or more to obtain all medical information and then to get offers from all buyers and to negotiate for best!
If you have already been given an offer and want to verify it's good, let us know or click on orange button above to get a quote.
We are happy to help you any way we can. Call or text us 800-380-3533 or click here to email us for more info or help.