WHY SELL A POLICY? Or, WHEN SELLING A POLICY MAKES SENSE In my last blog I discussed Viatical Settlements for people living with a terminal illness. When someone gets seriously ill, his or her expenses go up and their income goes down. Having the option of selling a policy by utilizing a viatical settlement is a resource that many have found life enhancing when they need it most. But what about people who are older and have policies they no longer need or want? That’s when a Life Settlement might provide a better option that either surrendering the policy for cash value or simply letting it go altogether. There are many reasons someone might want to sell a policy other than the need for cash due to a terminal illness. It’s a fact that more than 80% of all life insurance policies either lapse or are surrendered for the cash value. When this happens, the insurance company never pays the death benefit yet gets to keep all the premiums paid. So why would anyone pay premiums for a life policy for many years then simply let a policy go? Perhaps the reasons for getting the policy in the first place have changed or no longer exist. A spouse passes away, a mortgage is paid off, the kids have graduated college and are successful on their own… When life insurance is deemed no longer needed, rather than simply letting the policy go, the owner might want to look into a life settlement if the insured is over 65. What happens when premiums get too expensive to pay? This is an example of...
Whether seeking a viatical settlement or a life settlement, this is often the first question people ask me. “How much money will I get if I sell my life insurance policy?” It’s also one of the most difficult to answer because there is no easy answer. Telling a prospect a percentage or dollar amount that I know will entice them to complete my application does not serve anyone. To do so would be misleading. I don’t want to mislead anyone, nor do I want to raise someone’s expectations. That said, after an initial phone conversation, I can give you a pretty good idea of whether this is an option that makes sense or not. And, I do to taking into account your particular situation, health condition, age and policy type. Once I understand this, I can generally advise if it’s worth applying and taking it further, if the case will not qualify in the current marketplace or, if there may be a more beneficial alternative! Each case is different and many factors must be taken into account before we will know how much someone will get should their policy be successfully sold. Until all the facts are known and verified, a bona fide offer cannot be made. Once all the information is gathered and evaluated (typically by the settlement broker), it should then be presented to those companies which would be most interested in it. A competent and independent life settlement broker will create a competitive bidding war between multiple qualified providers, thus ensuring the seller the highest amount of money (the settlement) for their policy. It’s important to get multiple offers because each buyer has...
