If you no longer need your life insurance policy or simply cannot afford to make the payments, you may be able to sell the policy for its cash value. Here are a few guidelines on how to sell your policy and finding a life insurance broker that will help you get the most from your policy.
How Selling A Life Insurance Policy Works
A permanent life insurance policy can be converted to cash, though it involves several steps. You will need to have the policy appraised to determine its cash value. This often involves sharing your health records with a third party who will calculate your life expectancy based on these records.
Once the policy has been valued, you’ll need to find a buyer who will continue to pay premiums to collect the benefits after you die. Finding a buyer on your own is a complicated process that may create more problems than its worth.
Finding A Life Insurance Broker
A licensed insurance broker can shop your policy around and help you find buyers who are willing to give you the max cash value. Brokers can find the best deal to sell your policy for the most cash value. Just keep in mind that your broker may charge you a commission fee for connecting you with a buyer.
Things to Know
When selling your life insurance policy, keep in mind that you will not get the full face value of the policy and could actually only be a fraction of what you’re expecting to receive. Also, any life settlement broker you use will charge a commission. Commissions typically hover around 10%, but some brokers can charge as much as 30%. Know your broker’s commission amount before you agree to let them handle the sale of your policy.
Most buyers are looking for the sweet spot when buying a policy. This includes people who are over the age of 65 with chronic or terminal illnesses. Young and healthy individuals may find it difficult to find a buyer for their life insurance policy.
Keep in mind that selling your life insurance policy is not the only solution. If you’re selling your policy because you need cash, you may consider taking a loan against the policy. You can also speak with your policy issuer to accelerate the payout date or sell the policy to a family member if you can’t make payments.
Before You Sell
If selling your life insurance policy is the best option for you, make sure you get the most money you can for your policy. Never take the first offer given to you. There is no set valuation when it comes to a life insurance policy.
Review multiple offers to make sure you’re getting the best deal. If you’re unsure, talk with an expert who can help guide you through the process. Make sure you understand your debt obligations before selling, too.
If you have a large amount of debt you owe and haven’t been paying, your creditors may be entitled to claim your cash payout.