Is there a good time to cash in your life insurance policy? Or is life insurance something you have to keep forever?
These are important questions. Many times, policyowners keep a life insurance policy that no longer meets their needs, which can be an expensive decision. Not only will the policyowner continue to pay premiums on the policy, but they could also lose the opportunity to convert the policy to cash through a life settlement.
Additionally, seniors may choose to surrender certain policies, like universal life (UL), back to the insurance company for their cash value. However, the value of a life settlement is on average four-or-more-times greater than a policy’s cash surrender value. This means that frequently life settlements are a better financial planning option for seniors.
So, when should you consider cashing in your life insurance policy through a life settlement? Here are four examples:
- Your premiums are too high
- Your health has changed
- You’ve depleted your policy’s cash surrender value
- You want to save more money for your retirement
Your Premiums are Too High
Are you stuck with expensive premiums? It happens to many senior policyholders. They take out life insurance policies they can afford, but over time premiums go up. Between cost of living increases, unexpected medical bills, and other unplanned expenses, paying for your life insurance policy might not fit in your budget any longer. Getting rid of expensive premiums is one way to increase cashflow. And selling your policy through a life settlement provides a significant cash windfall that you can use for anything you wish.
Your Health has Changed
Has your health status changed since you first purchased your life insurance? Were you recently diagnosed with an illness? If you have a chronic or terminal illness, you should consider finding out how much you could get for selling your life insurance policy. The cash payout you receive can help cover unexpected out-of-pocket medical (and other) expenses, including long-term care.
You’ve Depleted Your Policy’s Cash Surrender Value
Some types of permanent life insurance, such as whole life (WL) and universal life (UL), can accrue cash value over time. In many instances you can withdraw or borrow against this cash value. You can also surrender the policy back to the issuing company in exchange for the cash value. However, if you’ve depleted some or all of the policy’s cash value, it makes sense to find out how much the policy would be worth in a life settlement. Even if the cash value is $0, you may still qualify for a life settlement.
You Want to Save More Money for Retirement
For many seniors, retirements are lasting longer. Unfortunately, you can’t go back in time and save more money to cover your expenses during these extra years. Because of this mismatch between existing savings and projected retirement costs, many retirees fear they will outlive their retirement funds. If you own a life insurance policy, a life settlement is a fast and simple way to add substantial funds to your retirement portfolio. Life settlements are an excellent but underutilized financial planning tool.
Time to Cash In Your Life Insurance Policy
People purchase life insurance policies for many good reasons. But over time, those reasons can change. If they do, just remember – you don’t have to keep the policy forever. Regardless of the reason you want to cash in your life insurance policy, a life settlement can be a financial game changer. If your policy no longer serves its intended purpose, you should get a free appraisal from a life settlement company.
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