Reasons Why People Sell Their Life Insurance Policy
Has something happened in your life that may make you consider cashing out your life insurance policy through a life settlement? Life events such as being diagnosed with a terminal disease, a family emergency, medical bills, long-term care expenses, or the desire to travel could all be good reasons to sell your life insurance policy. Did you know that if you qualify, you could sell your insurance policy for a cash payout? Your life insurance policy may have significant value and could be one of the most valuable assets you own! If you or your family find that your immediate need for cash is greater than keeping your policy, you now have an option that may provide you financial freedom.
At MRE Finance, we believe that knowledge is power. Our goal is not only to educate policy owners but to assist them in selling their policies. If your policy is a whole life, convertible term, or universal life policy, we will guide you through the process to sell your policy for a one-time cash payment. Whatever you do, don’t let your life insurance policy lapse. It may be more valuable for you to sell it.
It’s relatively simple to sell your life insurance policy. You transfer the ownership of the policy to a buyer known as a life settlement provider and receive a cash payment with no more expenses related to the policy.
Cashing out your policy can be beneficial for many reasons. These funds can be used to help pay medical expenses, care for a loved one, supplement retirement, travel, pay off a mortgage, consolidate bills, get out of debt and eliminate the need to pay expensive premiums.
Here we will go over each of these reasons for why someone decides to cash out their life insurance policy to a life settlement company.
CNBC.com reported in 2019 that 137 million Americans were struggling with medical debt. Some key points from the report showed:
Research shows that many Americans have faced financial hardship this year because of medical costs.
High health-care bills are the No. 1 reason people would consider taking money out of their retirement accounts or filing for bankruptcy.
Before you raid your personal savings, there are some proactive steps you can take to negotiate those balances down or even pursue forgiveness. As well as using a service like the one provided by MRE Finance.
In fact, medical debt is the top reason that people, regardless of age, even consider cashing in their 401(k)s or other retirement savings as well as selling the policy to a life settlement company.
Raiding the retirement & long-term savings is often not enough to cover these expenses. Research published this year found that 66.5% of all personal bankruptcies are tied to medical issues. Even in an emergency situation where you need care immediately, you can take steps to protect yourself financially.
Medical bills can get very overwhelming. In the United States, medical debt outpaces all other forms of debt including student loans and credit card debt and it is a problem that seems to growing as the cost of healthcare continues to increase.
It is worth noting that, when compared to other first-world countries, healthcare costs in the US are disproportionately large. In general, US citizens pay more for healthcare than anywhere else in the world. Additionally, the cost of medical procedures differs greatly from one provider to the next, sometimes by a huge margin.
Why People Find Themselves in Medical Debt
Uncovered Medical Expenses
Because many people are unfamiliar with their insurance plan and don’t know its details very well, they often end up with medical expenses that aren’t covered. It could be in the form of an out-of-network provider, a pharmacy, or perhaps even a procedure. The bottom line is that these expenses can quickly add up and sometimes even amount to a hefty individual bill.
It is surprising how often hospital bills contain errors. Unfortunately, most people don’t actually check their medical bills as thoroughly as they should. That in turn leads to billing errors often going unnoticed and simply being added to their debt.
Paying with Credit Cards
While there is nothing wrong with covering a medical expense using a credit card, it can become an issue if that credit card bill isn’t paid off immediately. Because of the high- interest rate on credit cards, accumulating credit card debt from medical expenses can spiral out of control. All this being said, helping to deal with and pay off medical expenses can be one of the primary reasons that one sells their life insurance policy through a life settlement.
Sometimes it is not a spouse or partner that you may be required to care for. In some cases, it can be a child or a grandchild. Accidents happen, and sadly they can be debilitating and the road to recovery can be long and costly. Most people don’t think about this in terms of their pet who may be their only companion. The ultimate costs of caring for a loved one is hard to determine. The main factor is how long the care will need to be provided for. This can be a short-term situation like a terminal disease or a longer more drawn-out illness like Alzheimer’s.
Health Care Options
The other variable that must be considered, and BOTH can get expensive, is whether you are going to use home health care or have your loved one placed in a facility that will provide the health care.
Health Care Cost
The cost of home health care varies significantly between agencies. A home health aide typically provides assistance with bathing and dressing but not with catheters or injections. Monthly rates based on the person’s need for approximately 44 hours per week gives enough time for a family member to have a normal day job and commute without leaving anyone alone. The national average for this number of hours of service is $3800+ a month. Assisted living averaged out at $3600. And the national average for putting a loved one in a nursing home (single occupancy room/not shared) is a whopping $7600 a month!
If your family situation involves a pet, this can be just as costly. Can anyone truly be prepared for an emergency vet visit? Pet owners have discovered, accidents will happen, and unexpected illnesses can occur. The average cost of an emergency vet visit is $800-$1500, and this is just the start. Things can get out of hand quickly. If your dog or cat needs surgery, this can end up adding thousands of dollars to your vet bill. Pet surgery can range from a few hundred to several thousand dollars, depending on The type of surgery and the severity of your pet’s condition. While you might be able to negotiate payment with your vet, pet insurance can help you shoulder this cost if it’s purchased ahead of time. However, pet insurance probably won’t cover the bill if your pet needs surgery now.
Cancer tumor removal as well as cancer meds and treatment can be at least $5,000. Hip dysplasia can cost up to $8,000. Ligament repairs can be up to $6,000, and glaucoma surgery and medication can be as high as $6,000 as well. Having to care for a loved one can be very expensive. Seniors may use the proceeds from selling their policies to pay for the costs of caring for a loved one while eliminating the additional financial burden of life insurance premiums. This is yet another reason that one sells their life insurance policy to a life settlement provider with the help of MRE Finance!
You and your spouse have lived a nice life. You have worked hard. You raised your children and they are now all grown up and have families of their own. You’re ready to retire but many people are just not ready financially for retirement. There are some signs that indicate that you just might not be ready to comfortably retire. They are:
Struggling with current bills
High level of debt
No plan for future major expenses
Unknown Social Security benefits
No monthly financial plan
Not accounting for inflation
Now maybe you are ready for retirement. And if you are, congratulations, things have gone well. But retirement is nearby, so what can extra money from selling your policy do? Many who are newly retired or close to retirement are thinking about finally being able to travel. This could mean touring countries throughout Europe. It could mean buying a Winnebago and traveling the highways of the United States or it could mean taking a month-long cruise that sails all over the world to ports from Alaska to Mexico.
In using the website tourradar.com to search for European tours and trips, we came across many options. A 15-day tour FOR ONE that visited Austria, Germany, Slovakia and Poland was $6,300. For a couple that is now $12,600 minimum!
Maybe you want to stay in the good ‘ole USA. One way people like to travel the highways and byways of the US is in a motorhome, RV, camper or Winnebago. These sorts of vehicles range greatly in price depending on how large they are and what kind of amenities they are going to offer.
While they are not inexpensive, some are more attainable than others. The most affordable options to consider are Class C RVs, and the iconic Winnebago brand has a few.
There are so many types of RVs out there to choose from. Some people want the whole motorhome experience while other drivers would prefer to hitch a travel trailer or fifth-wheel trailer to their truck or SUV. RVs can cost between $10,000 and $300,000 depending on the style and features. A moderately-appointed camper trailer pulled behind a truck might cost $20,000, while a fifth-wheel maybe $40,000. Most motorhome prices usually start around $100,000. RVs can cost between $10,000 and $300,000 depending on the style and features. A moderately-appointed camper trailer pulled behind a truck might cost $20,000, while a fifth-wheel maybe $40,000. Most motorhome prices usually start around $100,000.
Then you have your cruises. For now, cruises have taken a drastic hit and aren’t really operational due to the COVID-19 global pandemic. Cruising will be back and they will be back in a significant way due to pent-up demand. There are many different cruises you can take all over the world. The prices fluctuate based on where the cruise goes, and how many days the cruise is for.
Cruises offer one of the best values when it comes to traveling, but they are not cheap. People that cruise often are aware of this, but those who have never cruised before may not be quite so familiar.
One of the mistakes first-time cruisers make is taking the amazing prices for cruise tickets advertised online as all-inclusive. But what’s actually included in that price? The advertised ticket price covers accommodation only for one person on that particular cruise. Normally, it also includes some meals, some beverages, and it may include some entertainment while onboard – but not always.
Cruise ship ticket prices can also vary widely, even for the same sailing. Three primary factors influence the price of a cruise:
The Type of Cruise Line
Mainstream cruise lines tend to offer larger ships and lower prices, while luxury cruise lines are more expensive and have fewer (but larger) cabins.
The Cabin Type
All cabin types are not created equal. Interior cabins can be as much as 10 times cheaper than the swankiest suites on the same sailing. In 2017, for example, interior cabins on a 12-night Great Barrier Reef cruise on Celebrity Solstice priced at $2,349. The penthouse suite on the same cruise? A cool $29,725.
Where & When the Cruise Sails
Generally speaking, Caribbean cruises tend to be cheaper than more adventurous or remote locations. The average total cost of a 7-night Caribbean cruise per person ranges between $1500 and $2000, while the same cruise to Alaska may shift that whole price range up $500.
Why not enjoy your senior years? You have put in so much time and work, raised a family and it is finally time to reward yourself. If you don’t have the extra funds to cruise, or fly and travel all over Europe, or purchase a family vacation home, you now have a reason to consider selling your life insurance policy for cash!
Consolidating Bills & Getting Out of Debt
So, what exactly is debt consolidation? Debt consolidation takes multiple debts that you have, which are typically high interest such as credit card bills, medical bills, etc. and puts them into a single payment. Using a debt consolidation company might be a good idea if you can get a lower interest rate. This will help you reduce your total debt and reorganize it so you can pay it off faster. However, many debt consolidation companies induce seniors to stop paying their credit cards while the debt consolidation company “negotiates” with the credit card companies to reduce the overall debt and or interest rate.
While you may ultimately pay less in total debt and the high credit card interest is eliminated, what really happens is that after several months, the debt consolidation companies will settle with the credit card companies for about 40% of your outstanding debt. The debt consolidation company will often work out a payment plan for you that includes 20-30% of the overall payment as their fee. Additionally, what people don’t realize is that their credit scores and overall credit become severely impaired. They are no longer able to obtain a loan without paying exorbitant interest rates and they can no longer get a credit card. It often takes 5-10 years to for their credit to recover.
Rather than potentially ruining your credit, you can use the funds that you would receive from a life settlement company and pay down your loans and or credit card debt. This will give you all the benefits of eliminating high monthly credit card or loan bills while preserving your debt and even improving your credit score. Why live your golden years owing money, when there may be funds you didn’t know you had? Talk to MRE Finance and see how we can help you sell your life insurance policy.
No Longer Wishing to Pay Expensive Premiums
The average cost of life insurance is $26 a month. This is based on data provided by Quotacy for a 40-year-old buying a 20-year term life policy, which is the most common term length sold. But life insurance rates can vary dramatically among applicants, insurers and policy types.
Estimates via Policy genius figured for a 67-year-old male, living in NYC, looking for a 10-year policy for a million dollars would cost $413 for “best health”, $514 for “good health”, and $626 for “average health”. So why are these life insurance premiums so expensive, especially for seniors.
Life insurance premiums are based primarily on life expectancy, so many factors help determine rates, including gender, age, health and smoker status. In general, the healthier and younger you are, the cheaper the premiums. Insurers typically categorize applicants using terms like super preferred, preferred and standard, with super preferred being the healthiest category. Insurers then calculate premiums based on your risk class.
Your age can also significantly affect premium costs. The older you are, the more likely you are to pass away sooner, which means life insurers view you as a bigger risk. That’s why it’s wise to buy life insurance as early as possible; the longer you wait, the more your rates will increase based solely on age. You’ll also find differences in pricing based on gender, though these are often reflections of age. Because they have longer life expectancies, women will almost always pay less than men of the same age and health. According to the Centers for Disease Control and Prevention, life expectancy in the U.S. is 81.2 years for women and 76.2 years for men.
At age 40, a 20-year, $500,000 term life insurance policy will cost about $100 more per year. By age 50, annual rates for a 20-year, $500,000 term life policy will more than triple. As you can see, life insurance premiums become more expensive as you get older. Seniors may be better off cashing in their life insurance policies rather than paying high premiums. This is another reason to consider selling your life insurance policy to a life settlement provider with the help of MRE Finance! If you read this entire article, and we thank you for doing so, you have learned that there are many reasons for you to consider working with MRE Finance to sell your life insurance policy through a life settlement. Don’t hesitate another day. Try our free online estimate calculator today and find out the potential value of your policy and to see if your policy qualifies.