Many people pay for different insurances to ensure that their families are protected financially. Life insurance has its benefits and a lot of people feel comfortable paying those premiums, but sometimes they reach a point in their lives where they feel that they need to change things. This includes their insurance plans, so take a look below to know if selling your life insurance would be a good idea or not.
What Does It Mean to Sell Your Life Insurance?
When someone decides to give up their rights on being the owner of their policy, it means that they require a life settlement that gives them a nice sum of money in return. This transaction happens when the owner can’t carry on with the payments anymore, or if they are in a difficult situation and they need the money, or if they just reached a certain age where an insurance policy is just not suitable for them anymore, thinking that’s the best for their needs, finances, and living situation. But the insured person needs to have a life expectancy more than 2 years; if it’s less than that, then it would be considered as a viatical settlement.
What Can You Do When You Can’t Pay Anymore?
There are instances where you may feel like you can no longer afford to pay for the insurance. When a person wants to make a change, they should consider the different life insurance settlement options that are available to them. It can make a difference in their situation depending on which one they choose. It’s within your right to change the beneficiary if you don’t have any restrictions in place. You could use it as collateral for a loan that you apply for, or you could borrow against the insurance policy itself, and you can actually sell it to an individual investor or firm for money. Generally, you need to evaluate your decision thoroughly, so you can figure out which one is best for you.
When Can Selling It Be Worth it?
Many people wonder when would be the best time to do this, and it boils down to what type of situation you’re in. The best time could be when you’re trying to find appropriate funding for your retirement, or when you simply can’t keep up with the payments and you’re afraid of losing the insurance. Another example of when it may seem like a good option for you is when you’re already being provided long-term care, so having insurance wouldn’t really be beneficial for you. Also, it’s suitable if your health condition is critical; if you’re chronically ill and there’s no chance to have access to the death benefits early. The policy might have options that are useful to you if you’re lucky, but it could prove to be worth more if you sell it instead. Lastly, things change over the years, and when you reach an age when you simply don’t have anyone left that’s dependent on the support, then paying for insurance isn’t viable anymore.
What to Do When in Doubt?
If you’ve gone through the options, multiple times in your head and you’ve weighed the pros and cons of each aspect, but still can’t make a decision, then it’s best that you seek the guidance and advice of professional financial advisors, accountants, and even acquaintances that have gone through the same process and can share their insight and experience. This can mean a lot for you in the decision-making process, making things a bit clearer. It can help you decide and understand if this is the right and beneficial decision for you or not. It’s imperative that you don’t make a decision that you could regret later, so it wouldn’t hurt to seek advice or counsel from the experts that know everything about the process.
Never Feel Pressured
You need to understand that when you feel rushed or uneasy when it comes to the sale process, then it’s apparent that you shouldn’t do it. It’s within your right to refuse any offer if you’re not comfortable with it or if you change your mind. The rules of the process state that you have a small period to decide or have a change of heart during the first 15 days. This period may vary according to which state you live in. It’s great that you have this recession period to think things through again, so there’s no rush or pressure at all. You shouldn’t feel any obligation to accept any offers immediately.
What Type of Documentation Should You Submit?
If you decide on going through the process, then you should help make things go smoothly by preparing the specific documents and reports that your broker will need when they negotiate a great deal for you from potential buyers. You need to give them your medical history report and full health information and inform them about how many years are left for the premium payments. You also need to send the cash surrender value document of your policy. Lastly, you need to state which type of life insurance you have and list the type of premiums and mention if it’s possible to convert from one type to another.
Things to Consider
When you start dealing with brokers that will help you find a buyer, make sure that they are licensed and regulated by the state’s insurance department. Review any tax ramifications that can possibly happen when the sale goes through and check if there are any fees you should know about. Most brokers have a commission fee so you need to keep that in mind. Remember to be patient and know that your brokers will do their best to find the perfect deal for you. Let them know if you have any debts, because those funds will still be needed, so make sure they explain how everything works when it comes to the sale.
The decision of selling your life insurance shouldn’t be taken lightly because there are various factors to consider. You have to be completely sure this is the right course of action to take, and it’s going to give the peace of mind you need. Senior citizens should have easy and hassle-free lives, so it can be a good idea in some situations. It just depends on the person’s financial situation and the offer received. It can be beneficial in the right circumstances.