When you think about, “how much is my life insurance policy worth?” The settlement provider will first check if you are eligible for the life settlement or not. A life settlement is when an insurer is willing to sell his existing insurance to a third party to obtain a cash return. When the insurer sells the insurance policy, the buyer receives all the benefits and is also responsible for paying for the premiums as well.
Once the seller passes away, the buyer gets the death benefits from the life insurance policy. Life insurance can be considered as a form of investment that can be converted to cash for the insured person.
When you decide to sell your life insurance. There are certain standards that you have to meet to ensure that you are suitable to sell your insurance. There are listed as follows:
The Policy Type
You can only sell your insurance if it’s a convertible term life policy or a universal life policy. Permanent life policy or group policies can also qualify, but, premium financed and standard term policies will not get your life settlement.
If you are 65 and above years of age, then you are considered a suitable candidate for selling your policy and receiving an adequate life settlement. This is an obvious rule because the buyer can receive the death benefits once the insurer passes away. This factor affects the amount of money you will receive in exchange for your insurance policy, once the appropriate calculation is done on your settlement offer.
Life expectancy for a settlement has to be two years or above, this way it can be differentiated from a viatical settlement. Although, less the life expectancy, more the value of the life settlement.
Age of Policy
There has to be a certain amount of ownership you need to have on the insurance policy before you decided to sell it. This is an important point because the minimum period is different in each state. There will be exceptions in cases like divorce, the death of spouse, retirement and so on; the limitations would also depend on the country you are from.
The life insurance policy needs to have minimum 100,000 dollars in the death benefit before the insurer decides to sell it away. Till now, buyers have a structure that is well-defined and is able to handle much bigger policies. Hence, they tend to exclude any insurance policies that have a death benefit that is less than the amount that is mentioned above. Although, it has been predicted that with the current growth in the settlement market the minimum value of a policy may go down in the future.
So, in the future when you ask yourself, “how much is my life insurance policy worth?” always look at the eligibility criteria and the minimum value of your life insurance policy; check and see if the value matches the requirements mentioned by the company and that you have all the necessary documents ready. Once you do the settlement provider will help you out and ensure that you have a smooth process from beginning to end. This also includes selling your policy to a verified buyer.