If a life insurance policy is no longer needed, no longer wanted, or no longer affordable it might be a great time to sell. Your life insurance policy might be worth more than its cash surrender value.
Do not lapse or surrender your life insurance policy until you understand if it’s worth more.
Reasons to consider selling:
- The premiums are no longer affordable
- The need to replace lost income in case of death of the insured no longer exists
- The need for funds to pay estate taxes no longer applies
- There is a need for resources to pay for health expenses and long term care
- A term policy may be reaching the end of the coverage period
- Funds are wanted to improve a retirement lifestyle
Alternatives to selling a policy:
The sale of a life policy is not for everyone.
- Keep the policy in force through a loan or use of the cash surrender value
- Seek an accelerated death benefit, if available
- Assign the policy as a gift or charitable contribution
- Convert a term policy to permanent insurance
- Reduce the death benefit with a lower face value and lesser premiums
- Lapse or surrender the policy
Anyone considering a life settlement should first talk with their insurance, financial and/or legal advisor to explore all legal, tax and other consequences from selling their policy.
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