The importance of life insurance as a financial asset is immense as it assures a lumpsum amount of money at the time of death of the policyholder. Thus, life insurance is another name of safety and security. But in reality, nearly $140 billion life insurance benefits remain unclaimed or lapsed each year by policyholders aged more than sixty-five. There are many reasons for it. You might feel that you have no interest to continue your life insurance due to high premium or you no longer have any person economically dependent on you. In these cases, when carrying a life insurance policy fails to create any meaning, you might have thought, ‘can I sell my life insurance policy?’, but have not found any practical solution to it.
Well, if you wish, you can sell your life insurance policy to another person or a third party broker in exchange for cash payouts. Below we have discussed different aspects of selling a life insurance policy to help you make a better decision with your life insurance and live a better life.
How can you sell a life insurance policy?
The procedure of selling a life insurance policy is known as life settlement (some also call it viatical settlement). However, if you set up your mind for a life settlement, the first thing you need to do is to find a potential buyer. It is very much odd that you will find an individual buyer. So, experts always recommend to find a settlement firm or an insurance broker to sell the policy.
These settlement companies or brokers correlate with a wide range of investors to put your life insurance policy at the right place. You can also verify several brokers and agencies to get the best payout.
What buyer thinks and what insurance agency thinks:
In the case of life settlement, the buyer might ask you many questions regarding your medical condition, policy timeframe, etc. As per the buyer motivation, the buyer wants you to die quickly so that he gets a quick high benefit. On another side, the insurance company wants to you die later so that they can accumulate more premiums. That is why, in most cases, policyholders who sell their life insurance policy, are aged more than 65.
When should you sell your life insurance policy?
Whether you should go for a life settlement or not depends on multiple aspects. First, you need to decide how much money or asset you want to leave for your offsprings and closed ones after your death. Second, you need to have a good insight on your tax obligations to avoid the possibility of any legal disputes. If you have beneficiaries, then it is always better to talk to them before taking a specific decision. If no one depends on you financially, then it is a favourable condition for selling your life insurance policy.
One thing that you need to keep in mind that no matter how much cash payout you receive for the life settlement, it is always lower than the death benefits. Thus, always make sure that you get the best payout for selling your life insurance policy.