How Much Can You Sell A Term Life Policy For?
If you are considering selling your life insurance policy, it is essential to understand the process and factors that determine the amount of money you can receive. According to the Life Insurance Settlement Association (LISA), the average life settlement is 20% of the policy’s face value. However, the amount you receive depends on various factors such as age, health, premiums, and the type of policy you have.
Factors that Determine the Amount of Money You Can Get
Life settlement companies use several factors to determine the amount of money they offer for your policy. These factors include:
| Factor | Description |
|---|---|
| Age | The older you are, the higher the offer will be |
| Health | If you have a health condition that reduces your life expectancy, the offer will be higher |
| Premiums | The lower the premiums and the less time you spent paying them, the more the company benefits |
| Death Benefit | The higher your death benefit, the higher the offer will be |
It is advisable to gather offers from at least three companies before selling your policy. This allows you to compare quotes and find the best offer. However, be sure to consider the broader impact of selling your policy, such as losing access to the cash value of your policy and your family not receiving the death benefit when you die. The money you gain from the sale may also be subject to taxes and debt collection.
Alternatives to Selling Your Policy
Selling your life insurance policy may not be the best or only solution, depending on your financial goals. You may benefit from alternatives such as converting your term life insurance to a whole life policy, adjusting the death benefit, withdrawing from the cash value, or taking out a loan. It is advisable to speak to a financial advisor or estate planning attorney before selling your policy to ensure that you fully understand the legal and financial implications for both you and your heirs.
In conclusion, while selling your life insurance policy can provide you with much-needed cash, it is essential to weigh the pros and cons and consider other alternatives before making a decision.
