When selling a life insurance policy for a life settlement or viatical settlement, the estimate value of the policy varies by several factors, such as age, policy type, face value etc. The average life settlement payout is 20% of the death benefit and can be higher based on the type of policy, age and medical conditions.
For example, a life settlement with a $500,000 death benefit could potentially be sold for $100,000. The amount you will receive from cashing out your policy is usually calculated as a percentage of the original policy’s value and, there are a number of other factors that affect the amount, including:
- health status
- type of policy
- policy size (face value)
- premium amount
- life insurance issuer
- state you live in
A viatical settlement are for those who are or chronically ill. (Chronically ill are those that are unable to perform at least two activities of daily living on their own).
A person is considered terminally ill when they have an illness or condition, that
The value of the policy for a viatical settlement is approximately 55% to 80%.
- A viatical settlement are for those who are terminally ill or chronically ill.
- Terminally ill means it is reasonably expected that the persons illness to result in death within two years. It indicates a disease that will progress until death with near absolute certainty, regardless of treatment.
- Chronically ill are those that are unable to perform at least two activities of daily living on their own.
How Does Selling My Life Insurance Policy Work?
If you are over 70 years of age, you may qualify for a life settlement. A life settlement is a transaction in which you voluntarily sell your life insurance policy to a licensed third-party known as a life settlement provider or buyer. If you are terminally ill, you may choose to sell your policy and this is called a viatical settlement.
The buyer becomes the owner of the life insurance policy and is now responsible for the premiums going forward.
When you own a life insurance policy, you pay premiums for a significant number of years until your passing. In return, the insurance company agrees to issue a payment to the beneficiary or beneficiaries that you have listed on the policy in the event of your death.
Life and viatical settlements are for those that have unwanted or no longer need their life insurance policies. The settlement allows you to access a cash value now by selling the life insurance policy. The funds you receive from the sale may be used for anything you choose.
Some common reasons to sell your life insurance policy are:
- medical bills
- memory care
- long-term care
- financially help family
- pay off debt
- no more premiums to pay
- buy a vacation home
MRE Finance will review your life insurance policy details and some basic information that you will need to provide. With this information they are able to provide you with a free estimate if you are eligible.
A convenient and easy way to find out the estimate value of your life policy is by using our “free life settlement calculator”. The free estimate calculator allows you to determine if you’re eligible for a life or viatical settlement and its potential value. Click the button below to get started.
Am I Eligible for a Life or Viatical Settlement?
A life settlement is a single transaction, therefore, certain criteria must be met in order to be eligible for a life settlement or viatical settlement.
When you sell your life insurance policy, you will receive a one-time cash payment and you no longer pay the premiums.
The following factors determine the potential value for a life settlement.
- your age
- state you live in
- health condition
- type of insurance policy (Universal, Whole, Convertible term, Variable etc.)
- the policy pay out amount (death benefit)
- how much are the premiums
- your contact information
The Age of the Policyholder
Typically, those who are 70 years of age and older have a higher chance of finding a buyer willing to make an offer to purchase the life insurance policy for a life settlement.
Health Status and Life Expectancy
Your personal health status has an impact on life expectancy which affects the value of the life insurance policy. The longer the expected life span, the lower the policy’s value as the buyer continues to pay the premiums until they collect the death benefit.
The following 4 health categories are those to choose from that best describe your health.
- Healthy: Active and exercise regularly
- Minor Conditions: Medical conditions that require management such as diabetes or high blood pressure
- Serious Conditions: Serious medical conditions such as cancer, Alzheimer’s, heart disease, stroke
- Terminal Conditions: End-stage of life conditions such as late-stage cancer, congestive heart failure, liver, pulmonary disease
Can You Cash Out a Life Insurance Policy Before Death?
The answer is maybe. Cashing out a life Insurance policy before your death will be determined by the type of life insurance policy you have. Cashing out a life insurance policy before death is possible, however, financial advisors agree that this is not the best option for those wanting or needing cash.
- many term life insurance policies cannot be cashed out because it does not build up any cash value before death
- some term policies have an option that enables the insured to convert the policy into a form of permanent life insurance. Some of these types of policies are called convertible term life insurance. You may find you have option to add an optional rider for an additional cost
- whole, variable, universal life policies that accumulate cash value may allow the policyholder to access some of that money while they’re still alive through loans, withdrawals or surrendering
- review your policy details to determine if cashing out is possible
When you take cash value from life insurance policy, you also reduce the death benefit that your beneficiaries will receive. The cash value is the portion of your premiums that the insurance company has set aside to grow over time. You can access this money through policy loans or by surrendering the policy.
It is recommended to review the pros and cons of cashing out a life policy. You should consider:-
- the amount of funds you will receive by surrendering, cashing out, or a loan
- potential taxes you may owe
- are there any fees and penalties for cashing out?
Cashing out a life insurance policy is different than selling your life policy for a life settlement or viatical settlement.
How Does Selling My Life Insurance Policy Save Me Money?
Selling a life insurance policy for cash, whether through a life settlement or a viatical settlement, can save you money. You no longer have to pay insurance premiums, thus freeing up monthly funds. You can use the money received from the life settlement for other expenses; supplement your retirement, medical bills, memory care, long term care, pay of debt or anything you choose.
If you are still paying premiums for a life insurance policy that you no longer want or need, you can save money and gain cash for financial stability by selling the policy. The buyer continues to pay the premiums on the policy after receiving ownership.
Get an Estimate Value of Your Life Insurance Policy From MRE Finance
If you need money to cover medical bills, memory care, pay off debt, or just want some extra spending money, selling your life insurance policy for a life settlement or viatical settlement could be the best option for you. MRE Finance can help you on the journey to financial freedom.
MRE Finance can help you receive the best offer for your policy and guide you through the process with ease.
Want to find out the estimate value of your policy within minutes? Try our free estimate calculator!
MRE Finance specialists are also available by phone and will answer your questions. 1-800-521-0770.