If you over age 65 and own life insurance policies that you no longer need you can sell your life insurance policy for cash. Even policies with no cash value but that have insurance face value may qualify for these programs.
In general, a buyer will purchase the policy for less than the face value of the amount of insurance the policy will pay at the time of death but more than the present cash value of the policy.
Although it has been legal to sell insurance policies for 100 years it was mostly insurance companies that would buy an unwanted life insurance policy. In essence, the insurance company you bought the policy from had a monopoly for buying the policy from you. That has changed and now there are companies called life settlement companies that give you cash for your life insurance policy. These arrangements are not life insurance loans. You give up all rights and obligations such as premium payments when you sell your policy.
There are two types of purchases of life insurance policies. One is a viatical settlement that by insured people who are terminally ill use and the other is the life settlement.
People who have life insurance and become chronically or terminally ill can use a viatical settlement for getting cash for their life insurance policy. While a person may sell to whomever they wish, many insurance policies and several insurance carriers have provisions within existing policies that allow for an advance of your death benefits. If your situation is that your life expectancy is greater than six months and your life insurance policy has no cash value it is likely that a viatical settlement is your only financial option.
Viatical settlements, life settlements and senior settlements are all pretty much the same, except for taxes. Most states define “terminal” as two to four years. If your life expectancy is within your state’s definition of terminally ill, the proceeds of your settlement are usually non-taxed.
It is an excellent idea to use a tax advisor before finalizing a viatical or life settlement.
Once you have completed a viatical settlement you have no further responsibility with respect to your live insurance policy other than allowing the buyer to know you are still alive. The buyer pays all premiums and is responsible for all paperwork with the insurance company.
There is not much difference between a viatical settlement and a life settlement except for tax implications. Senior settlements are another term used to denote life settlements.
Clearly, consulting with a professional is advisable before you finalize any agreement. He or she will help you to understand the tax implications of your life insurance sale and answer any questions before the transaction takes place.
Once you get payment and turn the policy over to the buyer, you have no further obligations concerning premiums or dealing with the insurance company.
Selling unwanted life insurance policies for cash is well worth exploring. You must get your life insurance policy valued before you just throw it away. Seniors literally throw away Billions of dollars a year.. without ever knowing.