When you cancel your life insurance and sell your existing policy to a third party, it’s called a life settlement. It must be more than its cash surrender value, but less than it’s net death benefit.
When going through the process of a life settlement transaction, the original holder of the policy is transferring ownership to the new buyer. In exchange they immediately receive cash payment, or sometimes even reduced interest rates for the policy’s new beneficiary.
The new insured holder of the policy then pays all future premium payments and once the policy has matured, they will receive the death benefits upon their passing from the life settlement company.
Over 1 million seniors lapse their life insurance policies every year. Know your life settlement options, so you don’t experience major loss with no benefits when canceling your policy.
To start the sales process of your life insurance policy, you need to contact a licensed life settlement provider or life settlement broker. At Prosperity Life Settlements, we specialize in figuring out the best options for those interested in selling their life insurance policy. Let us explain further!
Life Insurance Policies
A life insurance policy, deemed as private property, is a contract you purchase through an insurance company. In exchange for premium payments, the insurance company will provide a lump-sum death benefit payment, to the beneficiaries upon the policy holder’s death.
Common Life Insurance Policies
There are many life insurance policies to choose from. Taking things into consideration such as the needs and goals of the owner, will help you decide which policy fits best. Some of the most common policies will be listed below.
Term Life Insurance
This form of life insurance is designed to only provide financial protection for a specific period of time. With traditional term insurance, the premium payment amount stays the same for the coverage period you select. Term life insurance is generally less expensive than permanent life insurance.
Universal Life Insurance
Being a permanent form of life insurance, universal is designed to provide lifetime coverage. Due to its lifetime coverage, universal life typically has higher premium payments than term.
Whole Life Insurance
Another permanent life insurance policy, whole life has cash value which doubles as a savings component and may accumulate tax-deferred over time. It may also be used as an estate planning tool. Helping to preserve your wealth that you’re planning to leave for beneficiaries.
Qualifying for a Life Settlement
Since they have been deemed as private property, the selling of your life insurance policy is usually regulated by state insurance companies and completely legal!
Most individuals decide to cancel, then sell their life insurance policy when they no longer need, or want it. When looking to obtain a life settlement, the first step is to contact a licensed life settlement broker, or provider.
At Prosperity Life Settlements, we navigate you through the complex process. Helping you determine whether or not you qualify for a life insurance settlement.
What Determines Eligibility?
To find out if you qualify, our website has a step-by-step questionnaire. Determining your eligibility starts it’s base of outcome on four things.
- If your policy is worth $100,000 or more.
- You’re 70, or older.
- Active, in-force policy for a minimum of 2 years.
- Your policy type is Universal, or Whole.
From there, other determining factors to qualify range from the policies face value, to the insured’s age, gender, etc. The outcome also depends on other outliers. Such as personal and life insurance policy data that’s collected during the eligibility process.
When to Get a Life Settlement
Many seniors over the age of 70 are realizing they may not need their life insurance policy, or maybe it’s no longer benefiting them. Most aren’t aware of the option to sell, instead of just canceling and surrendering the policy back to their insurance company.
If you’re questioning when the right time to sell your life insurance policy may be, here’s a list of determining factors you should consider.
- Insurance Needs Have Changed
- Premiums are Too Expensive
- Term Policy is About to Expire
- Long-Term Care Funding
- Cover Medical Expenses
- Boost Retirement Income
For more information, or to determine if getting a life settlement is right for your future, visit our website.
How Does the Process of a Life Settlement Work?
Once your trusted insurance broker has determined your eligibility, the process of selling your life insurance begins. Life settlement brokers have an important job in walking each client through the steps of getting their life settlement.
Your life settlement broker will first gather any information needed to complete the sale. From there, the specialist will make sure to seek out all top offers for your policy. Providing the most trusted advice and keeping all options in mind that best meet your needs.
After that, it will seem as easy as 1,2,3. The steps to complete the sale of your life insurance policy include:
- Signing transaction documents.
- Receiving cash settlement offers.
- And then most importantly, you get paid!
Are Life Insurance Settlements Taxable?
In most cases: yes. Though the process is highly complicated and difficult to say from case to case. In most cases, any interest gained from a life insurance payout, or any money you withdraw from a cash value life insurance policy while the insured person is still alive, is counted as income and taxed as income.
At Prosperity Life Investments, we advise you to consult with your CPA and/or tax professional for more information on the taxing of your life settlement.
At Prosperity Life Investments, we want our clients to gain financial freedom. By helping them sell a life insurance policy they no longer need, or want. We are dedicated to helping policy owners discover the hidden value in their life insurance policies. Leaving them with settlement money and a large capacity for other things in their life they may be missing out on.
Striving to educate policyholders on the viability of life settlements. We believe life settlements can be one of the best options for today’s seniors.
If earning a life settlement sounds like something you may benefit from, contact us today and start the process! Call (800) 591-2551, email firstname.lastname@example.org, or visit our website.