When to Cash in a Life Insurance Policy

Deciding whether to sell a life insurance policy is a major decision. Policyholders pursue claims with their life insurance policies for a variety of personal reasons, ranging from costly premiums, to subsidizing retirement income. While these seem like viable options, since selling a life insurance policy can come with financial implications, the decision should be approached with caution. With that in mind, here are some factors to consider if you find yourself at this crossroads of deciding whether to cash in on a life insurance policy.

Do you qualify for a life settlement?

If you’re on the fence about selling your policy, first, make sure to check on your eligibility. There are two main criteria for selling your life insurance policy: health status and policy value. Generally, to qualify for a life settlement, policyholders must be 70 years of age or older and in good health. 

Individuals typically must have a policy valued at $100,000 or more, relatedly, policyholders with life-threatening illnesses, such as Alzheimer’s or cancer, may qualify for a viatical settlement if their policy is valued at $100,000 or more.

Benefits of selling your life insurance policy

There are any number of reasons policyholders may pursue access to their life insurance before they die. For one, increasing costs of healthcare often make it difficult for many Americans and some policyholders to continue paying costly monthly premiums. Some cash in their policy as a means to help pay down debt or lessen long-term care costs, while others prefer access to funds now to maintain a steady retirement income. 

Data shows policyholders who test positive for life-threatening illnesses or receive terminal diagnoses will work to sell their life insurance policy to access their funds most immediately. For example, if you received a positive test result of a full body MRI scan for cancer, funds from a viatical settlement are designed to allot you the best care that money can buy. 

A viatical settlement can also pay for medical bills and allow you to enjoy time with your family. Viatical settlements can also provide you with the peace of mind in knowing your loved ones will not be left to bear the financial burden of your illness.

Surrendering vs. selling your policy

Through the several options detailed above, insurance industry company reports on the matter reveal policyholders usually prefer to sell their life insurance policy instead of pursuing a secondary option of surrendering. In short, what this means is that individuals can choose surrender a term policy at any time by stopping the payment of policy premiums.  

Surrendering a whole life insurance policy requires calling the insurance company; however, after paying monthly premiums over the course of many years, it can be disheartening to surrender your policy and ultimately never receive access to its intended protectionary benefit. 

Of course, avoiding this route is a possibility: selling your life insurance policy can provide you with immediate funds, and you’re free to spend the cash as needed, avoiding the limitations of choosing or having to surrender. 

How to sell your life insurance policy

Bottom line, finding the right company to buy your life insurance policy can be stressful and time-consuming.

Fortunately, leading companies, like Sell My Life Insurance Policy, are working hard every day to connect policyholders with life settlement and viatical settlement companies to make selling your life insurance policy quick, easy, and stress-free. Sell my Life Insurance Policy is designed to work so clients receive multiple offers and can then choose the option best suited to their individual financial situation. 

While you may not always be able to expect to receive the full value of your policy, settlement companies are typically able to offer significantly more than you would receive if you choose to surrender your policy. Don’t forget that policyholders may need to pay taxes on the money they receive from a settlement.

Ultimately, selling your policy means you won’t have to worry about paying expensive premiums or maintaining a policy you no longer need. Whether you’re unable to pay costly premiums or need immediate cash access to cover medical bills, remember: selling your life insurance policy can be a great option for individuals looking to fund their financial needs.