Life settlement investments have been benefiting many parties, right from sellers to buyers and even brokers and companies. If you’re considering selling your life insurance policy in exchange for cash for any reason, it might be a good idea. However, when considering a transaction for a life settlement, you should consider various factors to make sure it brings you the right outcome.
Making the right assessment and thinking from every possible angle would help you decide if getting a life settlement is required or not; and if required, fetch you the best deal. With that being said, here are some factors that you should consider before you sell your policy.
LANDING THE BEST DEAL
Most people find it extremely challenging and exhausting to find the right deal for their policy. Since the life settlement industry is still growing, there is a lack of transparency, which makes sellers feel and be at a loss. While shopping around and seeing what different life settlement companies have to offer can be exhausting, that’s the most sensible alternative you have to make sure you aren’t at a loss after you sell your policy.
HELP FROM OTHER PROFESSIONALS
When you buy a life settlement in exchange for your policy, it can have an impact on your finances and federal assistance from the state. You might or might not be benefitted from a number of programs. To make sure getting a life settlement gets you cash without risking other factors, you need to have a clear idea about your finances. For this, you should seek assistance from professionals, like an attorney, financial advisor, tax advisor, or a legal advisor.
THE SURVIVOR’S NEEDS
When you seek a life insurance policy, you obviously have the beneficiary and their financial security in your mind. When sellers sell their life insurance policies for life settlement investments, their beneficiaries get no death benefit. This is because, in a traditional life settlement, policyholders sell their policy for instant cash. If you want the survivor to still get the death benefit or a fraction of it at least, you should opt for a retained death benefit or a hybrid life settlement.
In a retained death benefit, after you transact, you no longer have to pay for the premiums. The buyer takes care of the premiums. Moreover, once the former policyholder dies, the beneficiary gets a part of the death benefit. This makes sense when you’re considering selling your life insurance policy because the premium costs can become too high for you.
If you’re selling your policy to get some instant cash in return while still protecting your beneficiary, you need a hybrid life settlement. A hybrid life settlement gets you a certain amount of cash as you sell your policy (which is obviously less than a traditional settlement value). And once the ownership is transferred to the buyer, the buyer takes care of the premiums. Upon the death of the seller, the beneficiary gets a fraction of the death benefit.
WHEN CONSIDERING NEW POLICY
If you plan to sell your existing policy for a life settlement so you can buy a new policy with that cash, you need to calculate if the new policy would provide an equivalent coverage and at what cost. Buying a new policy means paying high premiums since premiums are higher when a person ages. In most cases, buying a new policy by selling an existing policy for a life settlement doesn’t prove to be profitable. Therefore, thinking of other possibilities would make more sense if you plan to buy another policy.
DO YOU WANT TO PAY A COMMISSION?
A concern when you choose to sell your policy through brokers is paying for their commission. Since working with a broker is quite convenient, most people look for a broker to handle these transactions. However, when you’re already looking for a good price, cutting a part of what you get to set it aside for a broker doesn’t make sense. Furthermore, so many brokers work to get the kind of deal that would benefit them rather than their client. If you want to avoid all of this, going to a licensed life settlement provider would be a better idea.
When you consider all these aspects, you would have a better idea about when and what kind of life settlement you need. Life settlement investments have been a great option for senior citizens for various reasons, like handling medical expenses, life after retirement, etc. However, being mindful of the factors and intricacies of life settlements would help you make the most out of your policy.