Many times when people ask, “can you sell life insurance policy,” the answer is usually a resounding yes! Especially if you need financial support and if you see that your insurance policy does not add any benefit to your current lifestyle anymore. Life insurance has become a must in many households all over the world, but when you reach a certain age, you realize that insurance can be expensive and the same money you use to pay premiums can be invested in something more useful.
When you decide to sell your life insurance policy, you need to weigh your options and ensure that you’re on the right path and are making the right decision. If you’re ready to sell your policy, then it’s a good idea to get it done through a reputed life settlement agency rather than surrendering it back to the insurance company. A reasonable settlement company will help you with the selling process and keep your information confidential as well.
Why Should You Cash Your Life Insurance Policy?
When you think about selling, you will wonder, “Can you sell life insurance policy,” and “Why should you sell it?” Well, if you have family members that are beneficiaries of your insurance plan, then you must think twice before dissolving your insurance policy. Many times, the recipients are financially independent and can do without the death benefit of the policy.
When you sell the policy, you can use the cash to manage your assets, pay off bills, and any other long term debts that have accumulated over the years. Cashing out your life insurance can be handy because you can make use of the funds to pay for household repairs, any special events, vacation trips or you can put it towards your retirement funds. Policies that include cash values can seem tedious and overwhelming, but this doesn’t mean that the plan cannot be sold.
How to Cash out Your Insurance Plan?
Selling the policy:
When you sell your policy to a settlement company for cash, you relinquish all ownership of the plan; this is inclusive of premium payments and death benefits as well. You will receive a lump sum amount in exchange for your policy minus any loans or payments (if any).
Use cash value for premiums:
If you have low funds and you have to pay premiums, then you can arrange for money from your cash value funds so that they are deducted and go towards the payment of premiums. However, if you tend to finish your cash funds, then the policy will lapse, and the plan will end on its own.
Taking a loan:
This is one of the many responses to the question, “Can you sell life insurance policy?” When you take out a loan against the cash value of your policy, then it’s not taxable, unless you pass away before you pay back the loan. If you don’t pay back the debt in time, it will eat up your death benefit.
If you want to receive cash value from your policy, then you can make a tax free withdrawal; this can be done up to the amount you have already financed in the cash value portion of the insurance. If you withdraw more than your cash value entails, then you will be taxed. So, whether it’s taxable or not, your cash value funds will decrease whenever you withdraw from it.
Why Should You Go for a Settlement Company?
When you have emergency funds in your life insurance plan, it can be a good back up when you have any financial problems. However, many financial issues are different in their own way, and the whole process of cashing out your insurance policy can be a daunting task that can seem stressful. Hence, it’s essential that you choose a good settlement company that will help you out with the selling process, and select the perfect buyer for your policy. Once you decide on the ideal settlement company that meets all your needs, then you’re ready to sell your life insurance policy.
After you have sold your policy to the settlement company, there will be buyers lined up who will have an interest in your plan. The settlement company will keep your data confidential until they are sure of the buyer. The offer for your insurance will be based on many factors like age, health, policy, size, and the cost of the premium; you can usually see the estimates on the company’s website.