How to sell universal life insurance? Can I sell my life insurance policy for cash? Most people purchase life insurance when looking for ways to protect their loved ones with financial stability in the event of death. But these are long-term contracts, and a lot can change over time. There may come a time when you no longer need the policy or you no longer need the money. You may be wondering if it makes sense to keep paying your premiums each month instead of using that money for other things in your budget, or maybe you need to fund something bigger and want to cancel your policy for the full collect value.
Whatever the reason, if you’re considering selling your life insurance policy, you have options. Make sure you know how to sell universal life insurance, how the process works, what’s at stake, and how to make decisions you won’t regret in the future.
Can I Sell My Life Insurance Policy For Cash?
Universal life insurance policies are designed to provide lifetime coverage and can be sold for cash when the policyholder no longer needs the coverage. When you sell universal life insurance, the buyer carries the policy payments and the seller gets a large portion of the policy money back.
This can be a good option for policyholders who need money quickly or want to free up money that is currently being paid for premiums.
However, there are a few things to consider before selling universal life insurance.
First, you need to make sure you get a fair price for the policy.
Second, you should be aware that once you sell universal life insurance, you are no longer covered by that policy. If something happens and you need to use the policy for coverage, you can’t.
Finally, it’s important to remember that when you sell universal life insurance, you’re essentially cashing in on your investment in that policy, so be sure to weigh all your options before making a decision.
How does the sale of life insurance work?
Just like when you first bought your life insurance policy, when you decide to sell it, you enter into a legal contract. You agree to sell the entire deal to a third party, and the associated death benefit, in exchange for funds that you both agree to. To be clear, when you sell your policy, you are giving up all future rights and payments associated with it. Once the deal is done, the buyer takes over the premium payments and becomes the beneficiary of the death benefit. Previous names will be removed.
There are a few other terms and conditions to this process, so when you sell your policy you may hear it called a ‘life settlement’ or a ‘viatical settlement’. The latter occurs when the seller is terminally ill or has a life expectancy of fewer than two years.
How To Sell Universal Life Insurance?
A life plan is a more technical term for selling your life insurance policy for a lump sum cash payment. Investors are usually the ones looking for life insurance policies to buy and add to their portfolios.
Investors buying their policy on the secondary market should ideally look for sellers who are over 65 and have a limited life expectancy. The reason these policies are more profitable for an investor is that when you die, the buyer receives the policy’s death benefit.
Investors are, of course, most interested in high-quality policies. Contributing factors include the total value of the policy, as well as the rating of the life insurance company, with “A” or better being preferred. Investors may also look for low- or flexible-premium universal life insurance policies to minimize premiums. While your policy may still sell if you have a different type of policy, the offers may be lower.
To sell your policy, you need to find a life insurance broker or settlement company. They act as an intermediary in the transaction and can help you find an interested buyer. Keep in mind that brokers and settlement companies charge fees, which means you won’t get the full value of the sale price.
Three Steps to Selling Universal Life Insurance
There are three main steps to selling your universal life insurance plan.
- How do you know if you are prequalifying?
- Complete your qualification
- Accept your offer and receive your life settlement payment
It is also important to note that you do not have to sell your policy during any step of the process.
Step 1: Find out in advance if you qualify for a life plan
Most policies that can qualify for a life plan are universal life insurance policies. Other types of policies that may qualify include full life and in some cases even term (although generally only if convertible). But even if you have universal life insurance, you must meet certain criteria to qualify for a life plan. In general, life plans are best suited for people who are 65 years of age or older, have experienced a change in their health since they first bought the policy, and have a policy of $100,000 or more.
In some cases, healthy policyholders who are over age 70 and have universal life insurance policies of $200,000 or more may also qualify.
Do you fit into any of these scenarios? Then you can pre-qualify for a life settlement! You can be sure by giving us a call, chatting with us, or completing our Life Arrangements Estimating Calculator.
Step 2 – Complete your qualification
If you pre-qualify, one of our life management experts will find a convenient time for you to ask a few more questions about you and your policy. After that, your dedicated expert will collect some additional information from your life insurance company and your healthcare provider(s) on your behalf. This information ensures that we can make the highest possible offer on your policy.
Step 3: Accept your offer and receive your life settlement payment
Now your life settlement expert will gather all the information needed to complete your policy review and make you an offer to purchase your universal life insurance policy. They may have to call or email you multiple times to ask you some clarifying questions. Shortly afterward, often within days of collecting all the necessary materials, you will receive an offer to take out your policy. There are no obligations associated with the offer, so you can decline the offer and continue paying if you wish to keep the policy. However, if you’re happy with the offer and accept it, we’ll begin the behind-the-scenes work necessary to complete the sale of your universal life insurance policy for a large cash payment.
5 Tips For Selling Your Life Insurance
Selling your life insurance is not easy. It can be difficult to find an investor willing to make you an acceptable offer. However, there are ways you can maximize your payout. Here are five tips to keep in mind:
1. Know the Process
Selling your life insurance policy is a complicated business, so before jumping into the process, it helps to have a good understanding of how it works and what to expect. Make sure you know what type of policy you have, how much coverage you have, and how much money is in the account. Also, check the rules and regulations for selling life insurance in your country.
2. Consider hiring an independent consultant
Find someone who is an expert in arranging life insurance and let them assess the value of your policy. Independent advisers can provide appraisals of the value of your life insurance policy. They can also tell you about features that can add value, recommend brokers, and help fill the gaps.
3. Find a Trusted Broker
When trying to find the right broker, it is a good process to interview not one, but several. Ask questions like: What can you do to improve the offers I receive? What is your commission structure? Is it negotiable? Are you licensed in your state? Are you willing to give discounts if I pay the medical bills? Pay close attention to transaction fees as they can easily eat into your profits. Some experts suggest that brokers can charge between 30% and 50% of the gross price of the policy, or between 5% and 15%.
4. Receive multiple offers
Be prepared that your offers can vary widely. “People think one or two offers are the end and the end,” said William Mountain, CEO of Institutional Life Settlement Advisors in Hollywood, Florida. “But this is a fully traded market. An offer is duplicated and tripled by another company”. It is worth taking your time and waiting for a good offer, bearing in mind that the best offer may not be the first.
5. Finish your paperwork
Your broker will provide potential buyers with a copy of your life insurance policy. However, buyers will also want to see your medical records to gauge the value of your policy. “We need a five-year medical history, including primary care physician and specialists,” Mountain says. He adds that getting this data can cost several hundred dollars and be a lengthy process.
Why should I sell my life insurance?
Selling your life insurance policy can only be a smart move in certain financial situations.
If you can no longer afford your life insurance premium, selling the policy can ease the burden of a monthly payment and put at least some of that money back in your pocket. While there is always the option of simply canceling or canceling your policy to end monthly premiums, a life insurance plan usually results in a higher payout and may therefore be a better option for some.
It may also be worth selling your life insurance policy if you need to cover significant unexpected costs. For example, if you are diagnosed with a terminal illness and have to pay for treatment, you may be able to sell your life insurance and use the payment for medical bills. However, selling your policy is generally considered a last resort, as you can borrow against the cash value of your policy to cover medical expenses if you have permanent life insurance. If your policy has an accelerated death benefit, you can claim the money while you’re still alive to help pay for treatment.
Ultimately, selling your life insurance policy may be a good idea if paying or not paying the premium can benefit you right away and you don’t have to leave a death benefit to a beneficiary.
Benefits of Selling Your Universal Life Insurance
There are several reasons why selling your universal life insurance policy is the best decision for you.
Make sure you have enough money to cover medical costs.
By selling your universal life insurance policy, you can get a lump sum that can be used to cover bills, food, transportation, or other costs associated with your illness.
Ability to get more than the cash value of your policy.
If you have a cash-value universal life insurance policy, you may be able to sell it for much more than cash value.
There is no responsibility for monthly premium payments.
Selling your universal life insurance policy will ease the financial burden of paying a monthly premium for your policy.
Alternatives to Selling Your Life Insurance
A common reason for selling life insurance can be a need for money. However, if you need money quickly, there are several alternatives to selling your life insurance, which is often simpler and less complicated. Some options to consider before selling your life insurance include:
- Acceleration of the term: Depending on the type of policy and the insurer, you may be able to claim your life insurance money while you are still alive.
- Borrowing at the cash value of the policy: Borrowing money at the full value of your life insurance policy incurs monthly interest and helps pay back the amount borrowed. This is usually only possible if you have permanent life insurance.
- Waiver of the policy: This may not make much money, but buying out your life insurance gives you access to some quick cash in the form of surrender value, while also eliminating any surrender obligations in future premium payments.
- Taking out a personal loan: If you are in a difficult situation, a personal loan from your bank is an easier alternative in most cases. Although you have to pay interest, the rates are usually cheaper than traditional personal loans.
Who is Eligible to Sell Universal Life Insurance?
Typically, a universal life insurance policyholder must have a serious illness, such as cancer, ALS, Alzheimer’s disease, or heart disease, along with a policy of $100,000 or more to sell it.
If the insured is not seriously ill, the insured must be 75 years of age or older with a universal life insurance policy of $100,000 or more.
When should I consider selling my Universal Life insurance?
There is no simple answer to this question as it depends on several factors specific to each policy and situation. In general, however, there may be a few times when selling universal life insurance is the right move.
If the policy no longer pays interest and the premiums are no longer affordable, it may be time to sell. Another reason to sell could be if the policyholder needs immediate access to their policy money and doesn’t want to wait for the policy to expire. Finally, if the policyholder’s health or financial situation changes significantly, a sale may be the best option.
Ultimately, whether or not to sell universal life insurance is a personal decision that must be made after weighing all the pros and cons.
How Much Can You Get in a Life Insurance Plan?
As a policyholder, you can expect between 20% and 25% of the amount that would be paid in the event of your death, although this figure can vary.4 The exact amount you will receive in cash when you pay will depend on a wide range of factors, such as:
- The value of the policy’s death benefit.
- Your age
- The cost and time remaining to pay the premiums
Many companies will have limits before they even think about closing a deal. For example, some limit the process to people over the age of 65. You must apply through a formal process before you are fully approved. They will then use the factors listed above (and perhaps more) to arrive at a price that will still allow them to make a profit. The amount of money the seller receives must be greater than the surrender value of the policy and will be less than the value of the death benefit.
Before you sell your life insurance
There are some extra precautions you should take before selling your policy. Please request a current illustration or reprojection from your current provider first. This is a formal document that uses the current status of your policy (present value, benefit amount, and any loan balance) to predict its future value. Having this knowledge can help you figure out how much it might be worth to someone willing to invest in it.5 It can also help you weigh your options if something on your side has changed.
You should also shop around to get the best price; If you don’t feel good about the deal and think you can get a better deal, wait until you get the right advice. The Life Insurance Settlement Organization (LISA) is a non-profit organization that can help you.
Find out how sales can affect your taxes, too. For example, if you sell your life insurance policy, you have to pay capital gains. If the money you get from the sale of your policy changes your income level, it could affect your ability to qualify for government programs or grants, such as Medicaid.
Selling your life insurance policy can also incur costs. View offers from different buyers or brokers for a life settlement and compares the associated costs.
If you want to agree to fund something specific, keep in mind that if you have debts, your creditor may request these funds. This takes precedence over anything you plan to use the money alone. Make sure you know all the ways it could work.
Best Company To Sell Your Life Insurance Policy To
Selling your life insurance is a real option. Instead of giving up the policies that no longer make sense, you can sell the policies for a lump sum that will show you the life insurance benefit right away.
They will walk you through the process step by step. Before committing to a sale, know the value of your policies.
Let them guide you through the settling process of life. They can give you all the answers to all your questions about selling your life insurance.
If you want a quite reliable and trustworthy company to sell your life insurance to, Sell Your Life Settlement is the first choice in Las Vegas, Nevada. You can learn more about the different services they offer, the pricing structures they offer, and your suitability for different life arrangements by talking to their customer service representatives. You can contact them by calling their business line directly or through the direct contact form they have posted on their website to send requests and questions to their email whether you do it alone or through a broker.
Magna Life Settlements achieved a top score for the company’s customer resources. The company offers a free life settlement calculator, several detailed white papers, a robust company blog, and a YouTube channel. Magna Life Settlements offers these resources, which are stronger than the competition, for a high level of consumer insight and transparency. There is plenty of information for the discerning client as well as the financial advisor, making the company the best for client education in our review.
Abacus Life Settlements was included in our list of Best Company To Sell Your Life Insurance Policy To because of the company’s quick quotes and sales process. You can expect a quote within 24 hours and see the value of your policy. Abacus will generate a formal offer within 14-21 days. The money will be deposited into your bank account within 21 days of accepting the offer. This is faster than the other companies we reviewed and makes Abacus Life Settlements the best for quick sales.
Coventry ended up at the top of our Best Company To Sell Your Life Insurance Policy To list because of its size and strong reputation. The company pioneered life insurance by creating a secondary life insurance market in 1998. It is the largest provider of life insurance by a wide margin, accounting for 40% of all transactions in 2020. Coventry was named the number one provider of life insurance in 2020 by The Deal
How to choose the best life insurance company?
Finding the best life insurance company depends on many factors, including your age, policy size, and health status. We recommend comparing quotes from multiple life insurance companies to get the best price for your policy. If you choose to work with a broker, make sure you get an overview of any commissions or fees charged for their services before selling your policy through them.
We also recommend that you only work with reputable life settlement companies or brokers that are licensed in your state.
Frequently Asked Questions – How to sell universal life insurance
How much can I get for my life insurance?
It’s hard to say how much money you can get for your life insurance policy. Payments vary significantly and are based on factors such as the type of policy and its features, your age, your health, the value of your policy, the amount of coverage you have, the financial performance of your insurance company, and more.
How long does it take to sell life insurance?
It will probably take at least a few months to sell your life insurance. However, the amount of time it takes will depend on the number of offers you receive and the quality of those offers. If you accept the first offer that comes in, it can only take a month. However, depending on the market, you may have to wait several months to get a suitable offer.
How do I find a reputable broker?
You can do some research online to find a good broker. If you consult an independent advisor, they can also give you some recommendations. Before hiring a broker, find a few that have good reviews and schedule a short interview with each broker. Ask about their experience, their process, and most importantly their fees.
Can any type of life insurance be sold?
Most types of life insurance policies purchased directly by the individual can be sold once they are no longer needed. On the secondary market, term policies, lifetime policies, and universal policies can be sold. However, you may not be able to sell government-issued or employer-provided life insurance. Group life insurance policies also cannot be sold by one individual to another investor.
What should I do before applying for a viatical settlement?
Before applying for a viatical settlement, you can do several things.
- Check if you qualify for a viatical settlement.
- Collect basic policy information.
- Decide how you will use the money.
Finally – How To Sell Universal Life Insurance
Selling your universal life insurance policy can be a difficult decision. However, it can provide much-needed financial assistance to you or your family if your health deteriorates or you need quick cash.