A growing number of Americans sell their life insurance policies to get cash for retirement expenses and long-term care. However, it is important to proceed with caution – a life settlement may not be for everyone.
This article will help you navigate some key points to help you figure out if selling your life insurance is the right move forward. We also have an easy-to-use tool that can help you get to an answer quickly.
Do You Still Need Your Policy?
The first step is to understand why you may be keeping your life insurance policy. Those reasons may have changed since you first purchased the policy, so it is important to continuously review them.
A life insurance is a financial transaction that is made in the interests of the benefactors, not necessarily the insured. It protects your immediate family, your company, or a third person from losses in case of an untimely passing.
There are two questions you should consider yourself before considering a sale:
Will my death benefit have a significant financial impact on my beneficiaries?
Getting a life insurance policy demonstrates that you care about the financial security of the people you leave behind in case of your untimely passing. If after your retirement the financial security of the people you leave behind is dependent on receiving your death benefit – you should reconsider selling your life insurance policy.
Am I protecting against the interest of a lender or any third party?
You may still have outstanding debts or obligations that you anticipate your death benefit will help repay then you should consider holding on to your life insurance policy instead of selling it to avoid unexpected surprises. However, you could consider receiving a quote on your policy as a life settlement may be large enough for you to cover your debts and obligations early.
Do You Need To Sell Your Policy?
To be able to answer these questions properly you may need to review the terms of your life insurance policy, and step back and reflect on the use you may have in a cash settlement.
We’ve compiled the most common reasons below and while not all may apply to your current situation, we’ve seen that most policy holders tend to see that one or more of these factors apply to them:
Your Term Life Insurance Is Due.
Most Term Life Insurance can be converted into Permanent Life Policies and then sold for a cash settlement. If you’ve contributed to your term life insurance for several years you may be leaving a lot of money on the table by letting your policy expire.
Your Premium Payments Have Become Unaffordable.
Your premiums may have increased and you are finding difficult to cover them with a fixed retirement income or pension. You may also have had a recent emergency that has increased the financial pressure on you and prevented you from making the last few payments.
You Are Looking To Supplement Your Retirement Income.
Retirees are advised to withdraw less than 5% of their savings annually to ensure financial survival for at least two decades. But, if you lack savings and you’re relying on minimal retirement income, you may not have enough money to pay for extra expenses.
You are Looking To Cover Unexpected Medical Expenses.
Whether you are looking for additional medical coverage plans, retirement home or assisted living facility or even to pay for home improvements, there may be many unexpected medical expenses that may lead you to consider alternative sources of income.
Confidence in one’s ability to retire comfortably, or even retire at all is at an all-time low. We believe that financial security should be afforded to all seniors, and we think we can help. Longer and healthier lives are the greatest achievement of our time, but underfunded retirements can sour that achievement for financially insecure seniors.
Retirees and pre-retirees need to take control of their own financial well-being, now more than ever before. Driving for greater financial literacy can help bridge that gap, but changes in pension and retirement plans, rising healthcare expenses and longer lifespans are making retirement planning a complex problem.
We believe that individuals are able to make the decisions that serves their interests best provided they are presented with clear and tailored financial plans that takes their personal circumstances into account.