Why Would I Sell My Life Insurance Policy?
There are actually a lot of cases where selling your life insurance policy makes a lot of sense for most Americans (The first being that less than 10% of Insurance policies pay anything out at all in the end!):
- The inability to afford premiums. Instead of letting the policy lapse and be canceled, an insured person can sell the policy using a life settlement. Failure to pay the premiums may net the insured a smaller cash surrender value—or none at all, depending on the terms. A life settlement on a current policy, though, usually results in a higher cash payment from the investor.
- The policy is no longer needed. There may come a time when the reasons for having the policy don’t exist anymore. The insured party may no longer need the policy for his or her dependents.
- Cases of emergencies. In cases where an unexpected event arises, such as the death or illness of a family member, the owner may need to sell the policy for cash to cover these expenses.
- Cases involving key individual insurance policies held by companies on executives. This is typical for people who no longer work for the company. By taking a life settlement, the company can cash out on a policy that was previously illiquid.
- To Supplement Retirement. If your family is financially secure already, and you would prefer to use the money from the payout of the policy to live your life as you see fit during retirement or through a difficult medical diagnosis, then life settlement might be for you.