Your life insurance policy is meant to protect you and your family from unexpected tragedy and hardship. But what you might not realize is that you can also use that long-term investment to tend to the needs of the present.
If you’re struggling with medical expenses, rent payments, or abrupt emergencies, you have the right to sell your term life insurance policy. In selling your policy, you lose the long-term benefits of life insurance, but you can gain the valuable resources you need to contend with the day-to-day demands of your life.
To sell your term life insurance policy effectively, you need the right information on hand. Read on to learn more about policy sales and how they work.
Your life insurance policy is designed to protect you and your loved ones in case of an emergency. This coverage provides your family with the funds to pay for funeral costs and have some financial support if they’ve lost the primary breadwinner.
Waiting for the benefits of your life insurance policy to hit can take time. Other emergencies may crop up that require you to get cash quickly during your lifetime. In these cases, you can put your term life insurance policy to more immediate use by selling it.
Anyone that is over age 70 or living with significant health impairments may qualify to sell their life insurance policy under certain conditions. To do this, your life insurance policy must be a permanent policy or you must convert it to such a policy prior to its sale. Additionally, you may only sell life insurance policies with values of $100,000 or more.
Term policies, as the name suggests, only last for a set period of time. These plans are substantially more flexible than permanent policies, but their coverage is temporary. If you die, then, without re-upping a term life insurance policy, your loved ones – or the person who bought your term policy – won’t receive any benefits.
Permanent life insurance policies, comparatively, have no expiration date. If you retain your policy, your family will receive a payout upon your death, regardless of when you first purchased your coverage. Anyone who wants to buy a life insurance policy, too, will request that term policies get converted into permanent ones, if only for the sake of the eventual payout.
Other notable differences between term life insurance and permanent life insurance include:
Note that you can convert term life insurance into permanent life insurance, but you cannot reconvert a permanent policy into a term life policy.
Converting your life insurance policy doesn’t have to be a challenge. While you have to meet certain conditions to convert your policy, most insurance providers allow you to purchase a conversion rider.
You can purchase a conversion rider when you first buy your policy, but each rider comes with an expiration date. You may need to re-up your rider if you think you’ll want to convert your policy later down the line.
Conversions are easiest for individuals between the ages of 65 and 70. Many insurance providers are reluctant to allow individuals older than 70 to change their policies, though this varies from provider to provider.
There are some roadblocks that may make converting your life insurance policy more difficult. For example, you may not qualify for permanent life insurance, even if you originally qualified for term coverage. Check with your insurance provider to learn more about the qualifications you need to apply for a permanent life insurance plan.
What’s more, there are certain policy riders that may make converting your coverage more difficult. Two such riders include accelerated death benefits and long-term care.
Accelerated death benefit riders ensure that you have the financial means to care for yourself and your family in the face of a terminal illness. A long-term care rider, similarly, ensures that you can afford long-term care if you’re faced with significant mental or physical deterioration.
These two riders add unique benefits to your life insurance coverage that may diminish the value of your policy’s sale. If you don’t have these riders, however, and you need quick cash, selling your life insurance policy may be your best course of action.
There are unique circumstances that may make selling your life insurance policy seemingly more appealing. It’s best to go into these sales with a clear head. There are benefits and downsides to selling your coverage.
Your life insurance policy is a valuable thing. This policy protects you and your loved ones in the face of tragedy. If you retain your life insurance policy, you can rest assured knowing that your family will have the funds they need to care for one another and you after your death. Certain riders can even help your family through brushes with terminal illness.
All of that value, however, makes selling your life insurance policy particularly profitable. If you need quick cash, either to pay a medical bill or to make a mortgage payment, you can sell off your policy for immediate benefits.
Selling your life insurance policy isn’t always an in-and-out process. When you sell your policy, you may have to pay overhead costs.
Similarly, the amount you receive in your sale will not be as much as you would get if your family waited for the eventual payout. Even so, the option to convert your policy and to transfer it to someone else remains available should you need it.
If you have a life insurance policy, you always have the means to contend with your future on hand. You can sell your term life insurance policy to a variety of different buyers. These buyers, in turn, can give you the cash and benefits you need to see to your day-to-day responsibilities.
Don’t go into a term life insurance policy sale alone. Before you complete a sale, discuss the details with an experienced professional or use a life settlement calculator. Together, you can determine the value you should place on your policy and how you can still protect yourself and your loved ones in the future.
For more information on the sale of your term life insurance policy, reach out to Windsor Life Settlements, LLC.