One question that we commonly hear as a private medical insurance provider is whether or not citizens can sell their life insurance policy for cash. Regardless of the reasoning, many people find themselves deciding on what to do with their life policy. Many people find that maintaining their annual premiums is simply not worth the cost, especially as they age more and more. Selling your life insurance can often be beneficial because you would receive less compensation from canceling while also receiving less benefit if you were to pass away.
Many Americans face the struggle of finding independent insurance carriers to protect them in the fallout of the Affordable Care Act (ACA). ACA Alternatives is here to provide comprehensive alternative health care to Texas, Arizona, and the rest of the country where needed. By working in cooperation with numerous agencies and carriers, our agents are able to provide insurance solutions that are as affordable and comprehensive as possible for your family.
Today, we’ll take a closer look into what life settlements are and how they may be an ideal answer for your premium woes. If your family is in need of top-quality healthcare solutions, be sure to contact ACA Alternatives today for assistance!
What is a Life Settlement?
At its core, a life settlement is essentially a sale of your life insurance policy to a third party, where a payment is offered to you up front in exchange for death benefits in the future. In essence, you as the premium owner will receive a payment now for the policy, and future payments will be covered by the third party entity. This process involves collecting your policy information and medical records and reporting to a settlement provider with the data needed to make an offer. Whether or not you should sell your policy for cash heavily depends on your unique situation. Typically, companies will pay more to individuals who are not expected to live long and hold lower premium amounts. A cost-benefit analysis is done by settlement providers to determine the risks and rewards of your payment, offering a settlement that may prove beneficial for all parties.
While some citizens may see no benefit in a life settlement, others may seek it out for their own unique reasons.
Reasons to Sell Your Life Insurance Policy
For many people, the death benefits of their policy make staying the course an attractive option. You’ve already paid your premiums all of this time, why jump out of the coverage now? Every situation is different, but a few common reasons why people cite selling their premiums consist of:
- Unnecessary coverage. Life insurance is taken to cover spouses and children in the unfortunate event of one’s passing. As you enter your late 60s, it may become apparent that your wife and children do need the financial coverage of a life policy. Many people will opt out because their personal finances are enough to cover any costs.
- High-maintenance payments. Some citizens may be wary of continuing to pay their life insurance premiums. The annual costs of keeping your policy in place may simply not be worth the hassle. Regardless of the reasoning, you may choose to invest or finances into more immediate needs, such as medical costs or for securing a better retirement.
- High costs. Life insurance may be draining your account, which can be quickly rectified with a life settlement. Growing older is an expensive process, and one that may cost too much. Selling your plan now can help to provide immediate improvements for you and your family.
Life happens, and it happens in many forms for different people. If you believe that your life insurance policy is not pulling its weight, be sure to speak to our agents for the best healthcare solutions!
While a life settlement may sound like the perfect solution for your situation, it’s important to remember that every situation is different. Settlement providers expect a certain return on their investment, which is why a 30-year old cannot simply cash in on their life insurance and allow the agency to cover 60 years of premiums. Generally, you need to qualify by meeting the following requirements:
- Aged 65 or older. As we have stated, life settlements are intended for those who are advanced in age. Many providers set the requirement for you to be at least 70 years of age for consideration. Oftentimes, the age minimum sits at 73 years. Special cases can be made when serious health issues are present.
- Benefits exceeding $100,000. If your death benefits do not exceed this amount, the chances of being offered a quality settlement drop off drastically. Many settlement companies are looking for higher benefits to obviously optimize their financial dealings. However, a low death benefit can also indicate that your annual costs are not that high, and therefore a settlement would not fit your family’s needs.
- Two-Year Minimum Lifespan on Policies. It may seem too easy to sign up for premiums, sell your policy for cash, and then get out with an easy payoff. Across the states, it’s consistently required to have 24 months of life insurance in order to be concerned a settlement. This helps to avoid fraud while also ensuring that there are no lapses in the coverage.
Opting for a life settlement may prove to be a smart option for you and your loved ones. From selling your policy to taking out a loan, this approach can prove to be very ideal for many unique situations.
As a top provider of alternative health care to Texas and other states, ACA Alternatives is here to provide the coverage you need to live free from worry. If you are in need of financial support, our agents may be able to help with settlement options. Consultations are free, and there is no obligation to accept if you receive an offer. We’ll work hard to keep you and your loved ones protected against any life events. We aim to provide affordable healthcare solutions that leave nothing to chance. To answer the question: yes, you can sell your life insurance policy for cash. Should you, though? That depends. Contact us today to learn more!