- Business Expansions Made Easy With Logistics Company And Services
- Why Management Consultants Are Under Increasing Pressure to Deliver
- 5 Tips for Finding a Professional Contractor You Can Rely on
- How Air BNB Management Service can enhance Your Guest Experience?
- Why Supply Chains Rely on Great Logistics for Results
A senior life settlement is an answer for can I sell my term life insurance policy? Which is commonly asked by many life insurance policyholders. It involves selling of the life insurance policy that you own to a third party for instant money. In the process, there are three parties involved- a seller, an investor, and a mediator. You, as a person who owns the policy, are the seller and the person who is interested in buying your policy is the buyer. The person who stands as a connection between the investor and the buyer is a mediator.
There can be two types of mediators- a broker or a life settlement providing company/provider. A life settlement broker is a person who would sell your life insurance policy to a buyer. On the other hand, when we talk about life settlement providing companies, these are licensed bodies, approved by the Department of Insurance to both make life settlement transactions and buy policies. They function to either buy the policies for themselves, being the buyer as well or just mediate between the seller and buyer.
People sell their life insurance policy to get a life settlement for various reasons. One of the most common reasons is that a person might find it hard to keep up with the premium payments. After years and years of investing in a policy, there might come a time when a person’s financial status won’t allow making further payments. This is the right time to get instant cash out of all the payment you have been making for years by getting a life settlement.
Even so, other conditions could be that the beneficiary doesn’t need the coverage anymore. For instance, if your kids are already doing really well in life or you have a divorce, the beneficiary wouldn’t really need the death benefit. This is when you can get a life settlement and reap the benefits of all your investment for yourself. In general, any situation where you need cash right away, even in emergency situations, you can depend on a life settlement.
It gets really difficult to plan your retirement ahead of time and keep an intact plan for years. When you retire, a life settlement can serve as a great financial aid when you don’t have any source of income anymore. Moreover, if the beneficiary doesn’t really need to be covered, you can actually make the right use of all the money you have raised in years.
When you plan to go for a life settlement in exchange for your policies, there are certain conditions that you should meet in order to be able to get a life settlement. First of all, a life settlement is exclusively meant for people who are 65 or above that age. Since life settlement means a settlement for the seller and a prospect of profit for the buyer, lower life expectancy of the seller would mean the buyer would be able to get the death benefit sooner. This is why 65 years of age has been chosen as the benchmark.
Besides that, the minimum death benefit value of your policy should be at least $100,000. With a policy that is of this size, it becomes easier to frame an offer and study the policy. Based on which state you belong to, you also should own the policy for a minimum duration to be able to sell it. However, also based on which state you live in, there can be an exception if it is a case of divorce or death of a spouse.
One thing to remember is that your life settlement would be taxable. Generally, the cash surrender value for a life insurance policy is not taxable. However, when we talk about a life settlement, there’s a tax involved. Any amount of money that you make as gains beyond the cash surrender value would incur taxes. While this is a very general idea about how taxes work, you should definitely seek advice from a tax advisor.
Besides the taxable amount, whatever instant cash you get from selling your life insurance policy would help you deal with a financial situation.