When Can You Sell Your Life Insurance Policy?

Choosing to sell your life insurance policy can benefit if the payments are too big for your budget. You may want to consider selling all or a portion of your life insurance policy if your assets have decreased in value over time and your policy benefit is no longer needed. A life settlement advisor can guide you throughout this entire process to help you sell your life insurance policy.

How Does Age Affect Life Insurance Policies?

A life insurance policy usually needs to be active for at least 25 months or longer before you are eligible for a life settlement. These requirements differ with each state, as some states even require you to keep your life insurance policy active for five years before you are eligible for a life settlement. Reaching out to a life settlement advisor is essential in helping you understand the different rules for your state.

Which Life Insurance Policies Can You Sell?

A life insurance policy that can be changed to a permanent policy plan is eligible for a life settlement. For example, you can sell a whole life insurance policy or a universal life insurance policy. Survivorship whole life policies and universal life policies are also eligible to be sold. Discussing your needs with a life settlement advisor is critical in gaining professional advice on selling your life insurance policy while also ensuring you qualify for a life settlement.

At What Age is Best for Selling Your Life Insurance Policy?

Someone at least 65 and older that’s experienced a downturn in health is often the ideal person for selling a life insurance policy. Typically, this person’s life expectancy needs around 15 years or less. However, it’s sometimes possible to sell your policy if you are less than 65 due to you being extraordinarily ill and if your life insurance policy is expected to last much longer than your lifespan. A viatical settlement can be used in these situations if you are terminally ill.

Who Qualifies for a Life Settlement?

Learning about the qualifications for a life settlement is crucial if you consider this option. A life settlement advisor can help you understand this process, whether you have a whole life insurance policy or a term life insurance policy.

Five key factors will determine your eligibility for a life settlement. These requirements include:

  • Your Age and Lifespan
  • Type of Life Insurance
  • Cost of Life Insurance Premium
  • Death Benefit
  • Length of Life Insurance Policy

The requirements for a viatical settlement are also different from life settlements. A viatical settlement is for terminally ill people with a life expectancy of two years or less. Additionally, a viatical settlement includes selling a life insurance policy at a lesser rate than its original value for cash. On the other hand, traditional life settlements include a cash settlement that’s more than the cash surrender value.

Are There Penalties for Cashing Out a Life Insurance Policy?

An insurance provider will include a surrender fee from the total settlement. The surrender fee will vary based on the insurance company and the policy. You will also have to pay taxes on the payout from the life settlement.

The policyholder will need to pay taxes on the amount that’s higher than the life insurance premium. For example, if you paid $20,000 in premiums and received a $90,000 payout, you will pay taxes on the $70,000 income from the life settlement. You can reach out to a life settlement advisor if you need help on your taxes from a life insurance policy.

Best Life Settlement Companies to Help You Sell Your Policy

You can choose from various life settlement companies if you want to sell your policy. The best life settlement companies will have extensive industry knowledge and remain transparent while guiding you through the process.

These companies will also provide free consultations and are happy to answer any of your questions about your whole life insurance policy, viatical settlement, surrender fee, or any other details. An advisor will discuss all your life insurance settlement options to help you make the best choice for your needs. Now is an excellent time to contact a life insurance settlement provider for a no-cost consultation and learn more about the best settlement options for life insurance.