Welcome To Our FREE Life Insurance Settlements Guide
Below you'll find everything you need to know about how to turn your old life insurance policy into cold hard cash with a life settlement. It covers how the process works, the common reasons people sell their life insurance policy, the pros and cons, and the qualifications.
Click the button above to request a FREE custom life settlement quote.
What Is a Life Settlement?
A life settlement is a transaction where a policyholder sells their life insurance policy to a third party, typically a life settlement provider or investor. This provides the policyholder with an immediate lump sum payment, freeing them from future premium payments and offering financial flexibility.
The History of Life Settlements
In 1911, a gentleman by the name of John Burchard was in financial distress and having trouble paying his hospital bills. He was terminally ill, and his doctors only gave him a few months to live.
Fortunately, he had a life insurance policy that he could turn to that inevitably gave him the cash he needed to help support him during his remaining time.
John asked his doctor if he could purchase his life insurance policy before he died, so he could get cash now and his doctor would receive the death benefit after he passed.
The doctor in this landmark case, named Dr. Grigsby, agreed. Grigsby then took over the premium payments on Mr. Burchard's life insurance policy and received the death benefit after his passing.
In exchange, Mr. Burchard was able to get immediate financial help and turn this unused asset into cash.
This became the essence for the 1911 case of Grigsby v. Russell, which made it all the way up to the United States Supreme Court. After the trial, the Supreme Court determined that life insurance policies possess all the ordinary characteristics of personal property — so brokers could calculate a policy's value and offer policyholders the option to sell it for cash.
Why Consider Selling Your Life Insurance Policy?
Immediate Liquidity
A life insurance settlement can provide immediate liquidity for an unwanted or out-of-date policy.
Changed Circumstances
Many elderly Americans discover their personal or financial circumstances have changed over the years and the original reasons for buying the policy no longer exist.
Avoid A Lapse
Instead of letting the policy lapse because you can't afford or no longer want premiums, sell it for cash — the settlement provider takes over the premium payments for you.
How Do Life Settlements Work?
Request a Free Quote
The first step is to request a free quote — a policy evaluation and appraisal. Depending on the provider or broker, this usually takes a few weeks.
Policy Valuation
The broker or provider evaluates the policy using factors like age and health status, as well as the policy's death benefit, to determine its value.
Receive Your Offer(s)
You'll then receive an offer — sometimes multiple offers when working with a broker — for your policy.
Complete The Transfer
If a life settlement makes sense for you, the broker walks you through the paperwork to transfer ownership of the policy. Once transferred, you receive payment and are no longer responsible for the premium payments.
The amount of cash you receive is usually greater than your cash surrender value, but less than the death benefit amount. That's why life settlements typically make much more sense than surrendering or cancelling the policy — you often receive more cash than the life insurance company would give you.
What Are the Pros & Cons of Life Settlements?
There are many pros, but a few cons to be aware of.
Pros
- Receive a large lump sum of cash you can use however you like
- Relief from ongoing premium payments you no longer want to pay
- No more risk of the policy lapsing and losing all the money you paid in
Cons
- Beneficiaries no longer receive the policy's death benefit
- Potential tax implications on the settlement (some exceptions apply)
- Proceeds may be less than the full death benefit amount
At the end of the day, the best thing to do is educate yourself about the process, and then work with a broker that can get you the best offer for your policy — so you can determine whether or not a life settlement makes sense for you.
Find Out How Much Cash You Could Get
Ready to find out how much cash you could get for your life insurance policy? Click the button below to request a FREE custom life settlement quote.