No Cash Value in Your Life Iinsurance?
A Life Insurance Settlement may be the best option if you are over the age of 65 and no longer need your life insurance policy.
Insurance policies are typically taken out for a specific reason and to meet a specific need, most often to provide income to your family in the event of your death, to help secure a loan or for estate taxes. Term insurance has no cash surrender value and your universal life insurance policy or whole life policy may not have a cash surrender value. The most common question we receive is, If I have no cash value can I get a life insurance settlement?
Assume your family is grown, the loans are paid, you are retired or the business is sold. Just paying premiums on an unneeded insurance policy can wear on your finances, but if the premiums are going up each year, the cash value staying the same and even your planner agrees that you do not need the life insurance; It is time to explore a life insurance settlement as one of your options. You do not have to have a cash surrender value to qualify for a life settlement.
Case Study: 74-year old male
- Policy Face Value: $3.75M
- Annual Premium: $136,304
- Client Offer: $610,000
- Policy Type: UL
- Cash Value: $0
- Summary: The client’s estate had decreased, and it had become very difficult for him to pay his life insurance policy premium. He needed to sell the policy or it was going to lapse. Instead of simply accepting the cash surrender value of zero, he decided to test the market and find out the value of his policy from a life insurance settlement perspective. He was elated to receive a life insurance settlement of more than half a million dollars, considering his policy had no cash value.
If you purchased a permanent life insurance policy, by law you were to be given a cash value projection. The cash value element was typically slated for that long term rainy day, an emergency, or a day when you might not even need the insurance because the cash has grown so much. Life insurance settlements make it possible to receive upwards of 2 to 7 times the cash surrender value of your life insurance policy in the form of a lump sum.
Life insurance is marketed as magical and it truly is. Nothing self completes a plan like life insurance will in the event of your death. Death proceeds have assisted countless families and businesses navigate their darkest days by alleviating some financial burdens, but that is not the topic. You did not die… You no longer need the insurance… That long term rainy day may be now…? Be familiar with all of your life settlement options like life settlement loans, viatical settlements and medicaid life settlements.
When you purchased your policy, you more than likely pictured yourself as the person that would survive a long time and some day have a lot of cash in your policy and not someone who perishes and becomes a statistic along the way. Psychologically, the survivor to be makes the purchase.
The quickest life insurance sale to business partners is:
‘You look like you take better care of yourself than your partner. When he dies, are you going to be partners with his wife over there in the Mercedes or do you want to buy a policy on him to take her out of your business?…….. Press hard now, there are three copies.’
Case Study: 68-year-old male
- Policy Face Value: $1M
- Annual Premium: $46,786
- Client Offer: $300,000
- Policy Type: Term Conversion
- Cash Value: $0
- Summary: This was a key-man policy. After an executive retired, the owner of the company and the policy decided he no longer needed the insurance policy and wanted to pursue a life insurance settlement. He was very happy to be able to recoup some of the premiums that he had paid into the policy over the years.
Until the life insurance settlement industry arrived on the scene, you were simply limited to your cash surrender value when you no longer needed your life insurance and cashed it in. You can sometimes buy paid up insurance or borrow from your policy, but apart from a senior life insurance settlement, there is no other way to get more than your surrender value without dying.
If you have a term insurance policy or a universal life policy with no cash value, you get nothing when you surrender the policy, regardless of what you have paid in over the years. By definition, a life insurance settlement will yield you an amount that is greater than your surrender value and less than the face amount of your policy. How much more varies from case to case and depends on your specific information.
The following factors are considered in life insurance settlement appraisals:
- Health conditions
- Rating of your insurance company
- Type of Policy
- Cash Surrender Value
- State of residence
Each variable has an impact. Your age, gender and health condition determine a life expectancy. If someone else is the same age and gender as you, but has had their health deteriorate since purchasing the same life insurance policy as you; their life expectancy (LE) will be lower than yours. A lower life expectancy will actually make their policy more valuable than yours in the secondary market, because barring an accident; they will actually die before you do.
If you are over the age of 65 and have concluded that you no longer need or can no longer afford a life insurance policy, get a life settlement appraisal before surrendering it and make sure you understand all of your options. We now offer a new instrument to gauge your hidden value anonymously. The Life Settlement Appraisal Estimator™, a life settlement calculator, will provide you with a very general range of what your life insurance policy is worth as a life settlement.
Just to recap the answer to your question “If I have no cash value can I get a life insurance settlement?” the answer is simple once you know your options:
Yes, you do not have to have cash surrender value to qualify for a life settlement.