When a life insurance policy no longer fits your lifestyle or needs, a life settlement offers an alternative to surrendering it for its cash value or allowing it to lapse. Instead, you sell your policy or the right to its death benefits to a party other than yourself.

Why Consider a Life Settlement?

Choosing a life settlement over ending your policy can mean the difference between a modest sum and a more substantial payout. It’s a strategic choice if your policy premiums have become burdensome and the payout is preferable to the coverage.

Is Your Policy Eligible?

To qualify for a life settlement, policies usually need a substantial death benefit—often at least $50,000-$100,000. Let's break down the eligibility based on the types of policies:

• Whole Life Insurance: These policies include a death benefit and can accumulate a cash value over time. Policyholders generally receive four to eleven times the cash surrender value through life settlements.
• Universal Life Insurance: With typically lower premiums than whole life policies, universal life policies are attractive to investors and prime candidates for life settlements.
• Term Life Insurance: Despite lacking a cash value, term policies can qualify if they are convertible to permanent policies.

Eligibility isn’t solely determined by the policy type. Factors such as policy size, the age and health of the insured, premium costs, and the policy's terms and conditions also play a role.

The ads you see on TV for life settlements are often for companies that represent pension plans and other funds that buy policies. To get the best payout for your policy, make sure you are working with a consultant that represents you, the seller.

If you have any questions or want to explore life settlements for your financial strategy, feel free to reach out. Understanding the market can help you make informed decisions about your future.