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Article Directory :: Finance & Investment Articles
Can you sell unwanted life insurance policies for cash? Well, some people can, and this has become a popular option for older people with some policies they do not want any more.
In general, inestors actually buy the policy, become the benefiary, and offer to pay future premiums. They hope to make a profit when the insured person does pass away. In return, the seller gets cash they can use now.
This can be an attractive option for many senior citizens who need money to live on, and are not as concerned about heirs who would get a death benefit later.
In the past, a person only had a couple of choices when they did not want to keep a policy. They could simply stop making premium payments and let the contract lapse as unpaid. Or they could surrender it to the original insurer, and settle for the cash value. This cash value was usuallly a small percentage of the contract's death benefit though.
But now, life settlements are being promoted as a way to get paid well for a policy.
Who qualifies?
Most of the time, the insured person must be at least 70 years old, though someimes a younger person will be considered.
Do All Types of Life Insurance Work?
In addition, the policy must be permanent. Whole or universal life insurance would qualify. A term policy may be accepted if it has guranteed option to convert it to a permanent policy.
If you have term life, make sure you start shopping while you have plenty of time left on the contract. A term policy that cannot be converted to whole or universal life will not qualify though.
Is this a good idea?
Life settlements for insurance are not for everybody. But they can be great financial tools for some.
It helps if the beneficiaries are onboard. Those beneficiaries will give up the eventual death benefit when their loved one passes away. But many grown children are happy because that same loved one has a way to raise money for their current needs.
Business can also use this as a way to sell policies on employees who have retired or changed jobs. Instead of just letting the contract lapse, they can actually be paid cash. This can be a good use of a key man or business owners policy.
How much money can an insured person get?
There is a competitive market, and a qualified person may have to do some shopping for the best deal. But I have seen many people get paid a large percentage of the final death benefit in exchange for the policy. Of course, the investor wants to proft by collecting the benefits when the insured person dies. But since the market is competitive, they will certainly be willing to make a good offer.
How can a person find out more?
If you think you, or a senior citizen that you know, will qualify, you can look for a local life settlement broker. This broker should be able to help you shop the market to get competitive offers for your policy.
In the end, the decision will belong to the policy owner. The owner is not always the insured person, but many times it is.
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More articles by Marilyn Katz
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