Selling Your Life Insurance Policy
Can I possibly sell my life insurance policy?
Not all insurance policies can be sold. It depends on the policy you have and on certain situations.
There are some things you need to look into to determine if your insurance policy qualifies and how much you can possibly sell it.
How much is my insurance policy worth?
If your life insurance qualifies and can be sold, you can get paid 25%, 50%, or even more of the face amount of your policy (the amount that will be paid to your beneficiary when you die).
For example, your life insurance has a coverage amount of $200,000. If you sell it, you can get $50,000 or $100,000.
When do I get paid? What happens when I die?
You will immediately be paid when you sell your life insurance policy. You will however give up the beneficiary rights of your insurance policy. This means that when you die, your beneficiary will not get any money.
When is it better to sell your life insurance policy?
It is a responsibility to own a life insurance policy. However, your life can change and so does your need for a life insurance policy.
There may be a possibility that you will no longer need to have a life insurance policy. Your kids may all be grown or you may have outlived your spouse.
With these circumstances it may be a wise financial decision to sell your life insurance policy rather than cancel it.
When is it better to hold on to my life insurance policy?
It is not always a wise financial decision to sell your life insurance policy. There are also instances when even you want to sell your policy, you cannot.
If the reasons you bought your life insurance policy is still applicable such as you still have growing children, then it is a wise financial decision to hold on to your policy.
If you think you will be better off selling your life insurance policy, there are certain requirements you need to meet to qualify. Your age, health, and the type of insurance policy you have may affect your chances of being able to sell your life insurance policy.
Frequently Asked Term life insurance Questions
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Can I sell my life insurance policy?
Yes. Your life insurance policy is a valuable financial asset. Your policy represents a future monetary claim. Since your life insurance policy is categorically an asset, then, just like tangible assets, it comes with a monetary value.
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When should I start to consider selling my life insurance policy?
You will know if it is time to sell your life insurance policy by answering these questions:
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Do I have other financial assets in my portfolio?
Life insurance policy is a financial asset and forms part of your overall financial portfolio. It is always best to have a diverse financial portfolio. If your financial portfolio consists of just cash and your life insurance, it may not be wise to sell your life insurance have cash as your only financial asset.
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Do I still need my life insurance policy?
Whether or not you still need your life insurance policy depend on the number of dependents you have, how dependent they still are on you, and the current state of your finances.
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Is my insurance coverage worth my monthly payments?
You want to cut down on your monthly expenses. If you think you are paying more ton monthly premiums than what your life insurance is worth, it is better therefore to sell your life insurance policy.
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Would my death cause anybody to be in a financial crisis?
Having a spouse, children or anyone that is still financially dependent on you will greatly influence your decision to sell your life insurance.
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Is selling your life insurance worth losing it?
This is the summary of all the questions above. Selling your life insurance will give you money you immediately need today in exchange of a death benefit in the future. It is your preference that will dictate whether you will be getting a good deal or not.
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Why would I consider selling my life insurance policy?
There are only two obvious reasons why you would consider selling your life insurance. You no longer have any use for a life insurance and you prefer to have its cash equivalent today.
If your spouse is already dead, your children and all financially independent, there is no one that is still financially dependent on you, then it would be a smart financial decision to sell your life insurance instead of continuing to pay monthly premiums for coverage you longer need.
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How do you know if you can sell your life insurance policy?
There are some factors that will dictate whether or not you can sell your life insurance policy. First, you will need to be at least 65 years old. Secondly, your life insurance policy should be one that will give you lifetime coverage.
You or your life insurance policy will never be able to predict when you will die. However, for the purpose of qualifying whether or not you can sell your life insurance, the prediction on more or less how long you will live will be based on your health and the general average life expectancy of your generation.
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How much is the current value of my life insurance policy?
The insurance company has certain guidelines to determine the current cash value of your life insurance policy. The cash value of your life insurance is typically 25% -25% of the expected benefit. This means if the benefit of your life insurance is $200,000 you can sell your life insurance today for about $40,000 - $50,000.
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Can you possibly sell your life insurance policy and immediately receive cash today?
There are times when you can sell your life insurance. There are also times when you cannot. It depends on the features of your life insurance policy and your current situation. You should also bear in mind that should you sell your life insurance today, its cash equivalent will largely depend on how much the market is willing to pay for it. This condition changes over time.
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What are the factors that influence the value of my life insurance policy?
Several factors influence the current selling value of your life insurance policy. These factors include:
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Your total amount of coverage
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Total equity accumulated by your insurance policy (if any)
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Amount of premiums you still have to pay.
If the amount of premiums you still need to pay is lower and the coverage value is high ($100,000 and above), possible investors may find your life insurance policy an attractive asset.
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What type of life insurance policy is the best to sell?
In the best knowledge of the Life Insurance Settlement Agency (LISA), universal life insurance policies owned by individuals over 65 years old and with benefits over $100,000 are the best to sell.
There are other exceptions, though because other policyholders who do not fall under this category also want to sell their life insurance policies.