Why Life Settlements Offer a Way Out

By  //  November 18, 2020

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At some point there may come a time where you feel like ridding yourself of your life insurance policy is the best choice. If you no longer want to pay the premium, have an unexpected large expense, or simply just think a policy is unnecessary now, selling your policy for cash might be a good option.

You have several options at your disposal so before you make a move, consider the pros and cons of each. If your plan regardless is to sell your life insurance policy, then you are going to want to maximize your payout.

A life settlement is a distinct option since it provides the seller a lump sum of cash that exceeds the policy’s cash surrender value but is less than the net death benefit.

Resources for Selling

As you begin to map out your options for ridding yourself of your plan, take advantage of the free resources available online. Many sites offer not only detailed explanations of your options, but also free estimates and online calculators to give an idea of what your settlement amount might look like.

A broker can assist you, but using your online resources first will give you a foundation of knowledge to take to a broker so that you understand the language being used and also have some backing for if you feel you are not being given the best numbers possible.

When it comes time to officially sell, the broker will shop around for companies to bid on the policy and brings you the offers. Then you have the chance to compare them and accept the one that best suits your needs, generally the one that is offering the highest cash payout.

Emotional Considerations

It can be an uneasy feeling for you to come to terms with the fact that you no longer need your life insurance policy if the reasoning is declining health.

Rightfully so, the notion of a company in theory putting a timer on your lifespan and anticipating your passing can create some doubt that may prevent you from following through with your plans.

An anecdote to this emotional road block is knowledge, a firm grasp on the details of this process, and trust in the people involved is going to give the peace of mind required to get your signature on the dotted line.

From a monetary perspective a life settlement might be the most attractive way to financially handle declining health and reserve funds for loved ones that you wish to act as your beneficiaries.

Your network of trusted advisors, whether it is financial planners, family members, or even CPA’s or lawyers can also all weigh in on this topic. Having a well-rounded understanding of the trickle-down effects of selling will lessen concerns.

In the end this choice is about protecting yourself and the people that you love, as uncomfortable as these conversations may be, the more openly and promptly you can have them, the better. Waiting until an emergent situation arises is going to lead to emotional decisions that might be made in haste.