Selling Your Life Insurance for Cash
Many obtain life insurance so their family is financially secure after they pass. But, in recent years, more and more individuals are doing something completely different instead -- they are selling it for a profit. While this may initially seem like a strange idea, the decision to do so continues to gain popularity all over the globe. There are a number of benefits to going down this route, as well as several different ways to actually go about doing so.
How Do You Sell Your Life Insurance?
You can sell your life insurance policy through insurance settlement companies or broker agents. Of course, they will charge a fee, but using them can save you a considerable amount of time (and headaches) in the end. They will access your medical records and make bids for you. Naturally, you will need to do some preliminary research before making any big decisions, which can be done by reading guides on selling life insurance on investment or bank sites.
What Are the Benefits?
The number one reason individuals do this is to help cover emergency costs, such as large medical bills. Many people borrow from the value of their policy's cash value, but if this isn't enough or isn't possible, they sell their policy. It isn't just about medical expenses, though. Many decide to take the cash to spend their final time, whether it's months or years, traveling or crossing out bucket list items. This is especially common for retirees whose children are older and are doing fine financially on their own. They can rest assured knowing that spending the cash won't affect anyone they love.
What Are the Requirements?
Of course, there are rules when it comes to this process. Rules and regulations vary from state to state, though most require the seller to be at least be 65 years of age or recently diagnosed by a doctor with a terminal illness that will lead to death in 2 years or less. Essentially, the better shape you are in, the harder it will be to sell your policy successfully. That is why this process is recommended for those of a certain age or of declining health only. Moreover, most states will require that you will have owned your policy for several years, as they discourage individuals from buying life insurance just to sell it.
What Are the Other Important Aspects?
Other things to keep in mind include taxes, fees and specific paperwork. Oftentimes, selling life insurance costs hundreds if not thousands of dollars, thanks to the necessary acquirement of medical records, doctor's notes and broker costs. This paperwork can take a long time to gather and occasionally be met with obstacles. Moreover, you may have to pay capital gains, and you have the risk of losing your medical insurance or other medical government programs or subsidiaries by going through with the sale. If you do not need to benefit from these programs and have no issue paying more out of pocket, then your concerns remain minimal.