If you have a qualified policy, it may be worth more than you realize. Selling your life insurance policy directly to a company will certainly put a lowball offer in your lap.
Just a little more time to play the field and you’ll walk away with more money in your pocket.
Many life insurance policies can be sold at a certain time for limited cash payouts. However, there are some circumstances that make a policy qualified for significantly greater returns.
The face value of a policy is the death benefit. This is the amount your beneficiaries receive after you die. If this number is $100K or more it’s easier to sell your policy.
A face value of $100K or more becomes more valuable when the insured is living with significant health impairments like cancer.
If the insured is over 70 years old, regardless of physical health, a policy is likely qualified to some degree. If they’re age 80+, their policy is qualified for a much higher payout.
Just like any asset-selling markets, competition creates higher prices. If you sell your house directly to the first person that comes along, you miss out on the possibility of a bidding war between buyers.
If you don’t hire a broker your policy won’t see the market competition. A company can offer you anything without the fear of someone else coming along to take the deal. They don’t expect to compete with anyone.
When you work with a broker, they take bids from many investors and that drives the price up. An extremely qualified policy will have a lot of interest and the price will get pushed much higher.
When selling directly to a company, it’s in their best interest for you to not get a lot of money out of the deal. The money you get comes directly from their pockets. Their job is to secure your policy at the lowest possible price.
When you work with a broker, they are financially invested in the transaction similar to you. They’ll earn a commission, so they’re interested in the highest return possible, just like you.
Working with a broker is like putting another person on your team. They know what to look for in a policy and they won’t hide it from you. For example, an accelerated death benefit makes the policy significantly more valuable. However, some companies won’t share that with the policyholder.
In Ted Muller’s case, it wasn’t until he spoke with a broker from Windsor that he was made aware of the accelerated death benefit on his policy. Working with Windsor put someone else on his side to fight for him. It’s all about making the smartest moves when selling your life insurance policy.
How’s that for throwing a wrench in things? The people who provided you with a life insurance policy in the first place do not want you to sell it. They will drag their feet to make the sale harder for you. They want you to believe this is all just too complicated.
They make their money when policies lapse. They want to do what they can to avoid paying the death benefit.
A broker will deal with these companies directly. They have the experience and in many cases the pre-existing relationships to expedite the process.
The process of working with a broker when selling your life insurance policy starts with a free consultation. During this consultation, the broker will go over the details of your policy and all of your options. In some situations, even if the policy is extremely qualified, a life settlement may not be right for you.
If you decide to move forward with the broker, they’ll get to work gathering your documents to prepare your policy to go to auction. This includes getting medical records from your doctors to support your policy information.
A broker will take bids on your policy, organize the competition, and then present you with the highest offer. It’s then up to you to accept the deal.
Working with a broker will take more time than selling directly to a company. Selling a policy on the market may take 30-90 days. If you need cash immediately for an emergency then working with a broker may not meet your goals.
However, if your goal is to maximize your return on a lifelong investment, consider hiring a broker.
If you’re considering selling your life insurance policy, start with a life settlement calculator. You don’t need to be sure that you want a life settlement before reaching out. The more you know the more likely you’ll be able to make the best financial decision for yourself and your family.
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