3 Not-So-Crazy Reasons To Sell Your Life Insurance

If you are a 65+ something or know someone around this age who owns a life insurance policy, you may be able to sell it for an upfront payout. Say what???? Yep, this nifty idea is called a Life Settlement. Like your house or your car, your life insurance is an asset which can be sold to someone else. Pretty cool, right?



How it works:
It sounds a bit crazy, but there are legitimate financial companies that will pay you if you no longer want your policy. Life settlements have actually been around for many decades and Uncle Sam heavily regulates the industry today.

The industry average payout for a policy that is sold is around 20% of the policy’s benefit value. Once the transaction is done, the investor becomes responsible for paying the ongoing premiums and the investor collects the benefit when you pass away. This little fact is super important for consumers to know about because most life insurance policies never actually end up paying out a claim.

Here are some of the most common reasons why people sell their policies:

1. They no longer need the coverage

You usually buy life insurance to protect your loved ones in case you pass away early. As time passes, that need for protection can change. When your children are all grown up and financially independent, you may no longer need the insurance. Similarly, your spouse no longer needs the protection because you’ve saved enough for retirement to essentially “self-insure”. When you outgrow the original purpose, it can make sense to consider selling the life insurance policy and putting the money you make to good use.



2. The premiums are too expensive

Retirees may not have the same income and financial cushion to keep paying their life insurance premiums. Spending part of a monthly budget towards an insurance policy may not be the best use of your piggy bank. This is especially true for certain types of insurance where the premium increases with age. Over time, the costs to upkeep a policy may just be too expensive to maintain the plan. Consider the cost of giving up the insurance coverage versus the benefit of eliminating the premium payments and getting an upfront payout.



3. They want to fund a better retirement

In some cases, people may decide to sell the life insurance policy to fund their retirement. Peter Colis, the CEO of Ovid, a life settlement company, explains “The most common reason people come to us is to improve their quality of life. We like giving customers a large payout instead of the customer lapsing and losing their life insurance policy. We help people fill their retirement account, pay for medical costs, buy a vacation home and many other things.”

Instead of paying someone for something you most likely won’t need anytime soon, you have the potential to enjoy your retirement with some extra cash. Of course, make sure that you are financially secure to begin with. Consider selling and get ready for some fun!

How to proceed:

Selling a life insurance policy is no simple task. A good starting point is to learn about the various types of life settlement companies involved in the process. If you become serious about pursuing the option, you should consult with your financial advisor to see if it makes sense for your situation. Selling is a big decision but has the potential to make your golden years even more relaxing and fun.

I can’t wait until I get to retire and chill out for the rest of my days! Until then, you can find me blogging on www.followmeaway.com

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