Selling a life insurance policy may be a good option for seniors 70 years or older or for individuals who are chronically or terminally ill. It may also be an option if your life circumstances have changed, your premiums are no longer affordable or you no longer have dependents who will need financial support after your passing. With increased uncertainty about the economy, many seniors are looking into how to sell their life insurance policies. Selling your policy for a lump sum cash payment can help you pay for medical bills, vacations, paying off a mortgage, or supplementing retirement while providing you greater financial security and peace of mind.
The policy owner transfers ownership of the policy to a licensed buyer known as a Settlement Provider in return for a cash payment greater than the surrender value but less than the total death benefit. The process is easy. You’ll submit an application with basic information about the policy and the insured person to be evaluated by the Provider.
Information you will need to provide is:
State you live in
Type of life insurance policy you have (whole life, convertible term, or universal life)
The cash surrender value (accumulated cash value) of the policy
Amount of premium you pay per year
Once qualified, the Provider will request additional information such as the life insurance policy documents and the medical records of the insured. The private information you provide is needed for the Provider to make a decision to purchase the policy.
MRE Finance respects your privacy and only works with licensed and reputable Providers. Selling your policy typically allows you to receive more money than if you surrender or terminate the policy with the insurance company for the cash value. If you stop paying the premiums and lapse the policy you typically will receive nothing. People often pursue a life settlement because they no longer need or can afford their life insurance policy and would rather have cash in their pocket. You can use the money received from a life settlement transaction however you’d like, including paying for long-term care needs, medical bills, or funding your retirement
The buyer/provider will walk you through the process and with the information you provide they are able to determine if you qualify and then make an offer to purchase your life insurance policy
Health questionnaire. You’ll need to complete a health questionnaire.
Authorization. The insured and the policy owner (if different from the insured) will need to provide authorization for the life settlement Provider to contact the insurance company on your behalf and access medical records.
Insurance Policy Documents. You will need to provide a copy of the life insurance policy. If you don’t have copies available, the life settlement Provider can request these documents from the insurance company with your authorization.
Evaluation. The life settlement Provider will evaluate all the details of the policy and medical records to help determine value.
Offer. With all the necessary information, the life settlement provider may proceed with making you a cash offer for the policy.
Closing. The closing process is the actual transfer of ownership of the policy to the Provider with all the accompanying documentation. During closing, your settlement payment will be placed in escrow until your insurance company has verified the change of ownership. Once verified, the escrow agent releases the funds and you receive your cash payout.
Overall the process takes approximately 6-8 weeks for settlement to be finalized with an experienced Provider, but timelines can vary based on who your insurance company is and the Provider receiving the needed documents.
A viatical settlement is a life settlement for those with a terminal or chronic disease. These typically are the highest valued policies – often 2 to 3 times more than a life settlement as the policyholder has a limited life expectancy. Viatical settlements are typically used by individuals who need to pay for medical expenses now, so they choose to forgo the full value of the benefit in the event of their passing and receive a payment now.
A Life settlement refers to the legal transaction between the life insurance policyholder and a third-party buyer known as a Settlement Provider for an upfront payment. Life settlement cash payouts are typically higher than your policy’s cash surrender value but less than the total death benefit of the policy. Some of the reasons why people choose a life settlement include; unaffordable premiums, medical bills, supplementing retirement, emergencies, or if they no longer need the policy for their dependents or other personal reasons. A life settlement is usually a better alternative to lapsing or the surrender of a life insurance policy.
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