The sale of an existing life insurance policy is called life settlement. If you think that you need to sell your insurance policy, you can always approach a life settlement provider / broker to get a better idea about it. If you think that you no longer want a particular insurance policy and it’s futile to pay the premiums, it’s better to sell that policy and get a new one. Also, if you find it difficult to afford the premium payments after your retirement or loss in business, you can sell your life insurance policy. Selling your life insurance policy for cash is not a cakewalk. If you don’t know well about the procedure, you may lose a lot of money. To avoid such issues, here are three important tips that will help you sell your life insurance policy in the best way:
Know how life settlements work
Life settlements simply mean the selling of life insurance policies. With the help of life settlements, you will be able to get more money from your insurance policy when compared to a situation where you will just surrender or cancel the policy. However, this amount will be lesser than the amount that you will be getting at the death of the policy. You need to analyze your situation and make sure if you want to keep paying a premium for the policy or not.
You can either contact life settlement providers directly or get in touch with them through life settlement brokers. It’s better to involve life settlement brokers if you lack clarity on the entire process because they will sit down with you and explain everything in simple terms so that you don’t get cheated due to ignorance. You need to submit copies of your life insurance policy documents and your medical records to the life settlement provider and then they will come up with an offer for you.
Once you accept the offer put forward by the life settlement provider, that particular company pays you and buys your policy. The provider pays for your premium installments further and receives the benefits when you pass away. Most of the people who sign up for life settlement are above 65 years of age and have a considerable amount of money as the face value of their life insurance policy.
Know what you need to watch out for
Make sure that you approach a good life settlement provider and a reliable life settlement broker since they can mislead you. You need to research well about the background of the life settlement broker before you sign up for anything since they may annoy you by repeatedly checking on you. Some brokers can charge you too much for their services and that’s why you need to keep yourself updated with the industry standards when it comes to the brokerage.
While some people sell their life insurance policy because they can no longer afford to pay the premium installments, some people just want to sell it so that they can sign up for a better policy. Do not get influenced by insurance sellers blindly that you decide to sell your insurance policy without giving it much thought. This is because you may have to pay higher for your next insurance policy since you’re much older now and you may not get a good deal on life insurance policies if you’re suffering from a chronic illness.
Consider other options as well
Life settlement options are not really narrow. You need not sell your entire life insurance policy if you need money urgently, but you can sell a portion of your policy. Since you’ve been paying premiums for the life insurance policy on a regular basis, you can consider it as an asset and you can borrow money from it instead of completely selling it. In this way, you can use whatever money you require and still keep the policy alive. The rest of the portion that’s remaining after whatever you borrow will be given to your loved one after you pass on.
You’ve paid a considerable chunk of your income to keep your life insurance alive and that’s why it’s important that you take life settlements pretty seriously.