One of the most common questions that seniors find themselves asking is if they are eligible for a life settlement. Being eligible for a life settlement means that you meet the requirements to sell your life insurance policy. Life settlements typically result in a substantial sum for the policy owner as a large amount of money is transferred to them at the time of sale. Here’s what you need to know about the eligibility requirements for selling a life insurance policy.
Reasons to sell a life insurance policy.
Before digging into the details of the requirements you would need to meet to sell your life insurance policy, let’s look at some of the most common reasons to sell a policy.
Thousands of savvy seniors have discovered the financial benefits of selling their life insurance policies. One of the most common reasons seniors sell their life insurance policy is to cover medical and emergency expenses.
Another common reason why thousands of seniors have sold their life insurance policies is that they needed money to finance a more adventurous lifestyle abroad. For example, have you found yourself dreaming about living on the beach in an exotic country? Of course, you have! We all do it; the only trouble is, not everyone can afford to move overseas and live lavishly in a foreign country.
By selling your life insurance policy, you could potentially free up enough money to retire in comfort overseas and never look back. Imagine sipping a mojito on the shores of Costa Rica. All you need to start living the dream is to meet the requirements to sell your policy. Here’s what you need to know.
How to qualify for selling a life insurance policy.
Certain factors can qualify or disqualify someone from being able to sell their life insurance policy. Fortunately, the requirements are very straightforward. If you get confused about the requirements at any time, don’t hesitate to get in touch with the helpful team at MRE Finance. They can answer all of your questions.
The primary requirement for selling a life insurance policy is to be at least 70 years old. You cannot sell your life insurance policy until you are 70 or older unless you have a chronic or terminal illness.
In most situations, your death benefit will need to be at least $100,000. The reason for needing a death benefit of at least $100,000 is that the policy will be worth trading. The most desirable range that third-party buyers look for when purchasing life insurance policies is a death benefit of at least $250,000.
The amount of the death benefit translates into the face value of your policy. In other words, the value of the death benefit represents your policy’s face value, which is a factor in determining the amount you can sell it for.
Another requirement you should be aware of is that the life insurance policy you intend to sell must be transferable. Typical types of policies that qualify for a life settlement are:
- Term policies that are convertible to a permanent policy
- Universal life
- Variable universal life
- Whole life
- Joint survivorship or Second to Die*
*Joint Survivorship or 2nd to Die policies can also be sold as long as both people on the policy meet the death benefit, health and or age requirements.
Does it cost you anything to sell your life insurance policy?
When you sell your life insurance policy, you have freedom to use the money for any purpose. In most cases, you will have to pay some taxes when selling your policy which can vary depending on where you live and how much you paid into the policy. If you sell your life insurance policy with the help of a third-party company, you may have to pay a percentage of the offer as a commission or broker’s fee unless you work directly with a buyer. Either way, you will still have more money than the cash value of your policy if any.
What happens if you have a condition that limits your life expectancy?
As a general rule, you need to be at least 70 years of age with a life expectancy of 15 years or less. However, if you have a potentially life-threatening condition, you may qualify for a type of life settlement, known as a viatical settlement, regardless of your age. Now that you know more about the requirements that you will need to meet in order to be eligible for a life settlement, you’ll want to know how to get started.
Selling your life insurance policy is an easy and straightforward process. All you need is a little guidance to help you connect with the right buyers. Many seniors lose money when trying to sell their life insurance policies without help or instruction. If you qualify, MRE Finance can help you sell your life insurance policy to a licensed buyer for a significant sum of money.
Want to find out what your policy could be worth? Try our Free Life Settlement Calculator and receive an estimated value of your policy in minutes. If you prefer to speak with someone, give us a call at 1-800-521-0770.