How To Sell A Term Life Insurance Policy

If you are in need of money, selling your life insurance policy could be profitable. But it is not always easy. From getting your policy appraised for its current market value to choosing a buyer, the process of selling your life insurance is often fraught with complications. It becomes harder if you are under the age of 65 with good health, and if you only get a fraction of your policy’s worth (sometimes up to 50% lower than the actual value), it also fails to meet your monetary needs. Much like home or auto insurance, a life insurance policy is highly individual and the same does not work for everyone. However it is possible to successfully liquidate life insurance by being diligent about market research.

What Does Selling A Term Plan Mean?

A life settlement is a more technical term for selling your life insurance policy for a one-time cash payment. Typically, investors are the ones who are looking for life insurance policies to purchase and add to their portfolio. Investors who buy your policy on the secondary market are looking for sellers who are over age 65 and have limited life expectancies. The reason is that when you die, the buyer gets the death benefit of the policy.

Naturally, investors are the most interested in high-value policies. Contributing factors include the total value of the policy as well as the life insurance company issuer rating, where “A” or better is preferred. Investors may also be looking for universal life policies with low or flexible premiums so they pay as few premiums as possible. While your policy may still sell if you have another type of policy, the offers may be lower.

Tips for Selling Your Life Insurance Policy

To sell your policy, you’ll need to find a broker or a life insurance settlement company. They will act as the middleman in the transaction, and find an interested buyer. Just keep in mind that brokers and settlement companies charge a fee, which means you won’t get the full value of the selling price.

How Do I Sell My Term Life Insurance Policy?

Selling your life insurance policy isn’t easy. It can be difficult to find an investor that is willing to give you an acceptable offer. However, there are ways that you can maximize your payout. Here are five tips to keep in mind:

1. Get To Know The Process

Selling your life insurance policy is somewhat complicated, so before you get knee-deep in the process, it helps to have a solid understanding of how it works and what to expect. Make sure you know what type of policy you have, how much coverage you have and how much cash value is in the account. Also, look into the rules and regulations for selling life insurance policies in your state.

2. Consider Hiring An Independent Advisor

Find someone who is an expert in life insurance settlements and have them assess your policy’s value. Independent advisors can offer appraisals of what your life insurance policy is worth. They can also tell you about features that may add value, recommend brokers and help fill in the gaps.

3. Find A Reputable Broker

When trying to find the right broker, a good process is to interview not one but several. Ask questions like: What can you do to improve the offers I get? What is your commission structure? Is it negotiable? Are you licensed in your state? Are you willing to give discounts if I pay for medical expenses? Pay close attention to the transaction costs, because they can easily eat up your profits. Some experts indicate brokers can charge as much as 30% to 50% of the gross policy price, or as little as 5% to 15%.

4. Round Up Your Paperwork

Your broker will provide potential buyers with a copy of your life insurance policy. However, buyers will also want to see your medical records to gauge the value of your policy.

Conclusion

You can do some research online to find a good broker. If you consult an independent advisor, they can also give you some recommendations. Before you hire a broker, find a few that have good reviews and set up a short interview with each. Ask about their experience, their process and, most importantly, their fees.

Also Read:

7 Things You Should Be Aware Of When Purchasing A Life Insurance Policy

Understanding The Advantages Of Term Insurance For Senior Citizens