Sell policy when adult children are more affluent than you

Owning life insurance has provided millions of American families with income protection in the event of the premature death of the primary breadwinner.

The cash from the policy’s death benefit is often a financial lifesaver for the surviving spouse and children. Paying for the mortgage, living expenses, college tuition, and quality medical care are just a few examples of how life insurance helps minimize the economic disruption caused by the death of the insured.

But as children leave the nest and become financially independent, or even affluent, the parents’ need for life insurance coverage often becomes irrelevant.

While some elderly parents will continue to maintain a life insurance policy to provide cash inheritance for their adult offspring irrespective of need, other seniors who are living on a fixed income may find it difficult to justify the escalating premium payments.

For today’s cost-conscious retirees who are feeling the pinch of rising inflation and market volatility involving the balance in their retirement investments, selling an unwanted life insurance policy can be a smart choice for two reasons:

• Eliminates the financial stress of expensive premium payments
• Provides a cash windfall to pay for lifestyle expenses or costly medical treatment

Most life settlements pay on average 3 to 4 times the amount of a policy’s cash surrender value. That’s why selling an unwanted policy is far more preferable than allowing a policy to lapse or surrendering it back to the carrier for pennies on the dollar.

Life Settlement Qualification and Pricing Guidelines

Seniors aged 65 and over may qualify for a life settlement, but the primary factors are the life expectancy and health of the policy owner. The shorter the life expectancy, the greater the chances that a secondary market buyer would show interest in purchasing the policy, and the higher the amount they are willing to pay.  
Below is a sampling of the factors we use at Trust Life Settlements to determine eligibility and to provide you with an estimate of the policy’s value in the secondary market:

• Age 65 or over, with a life expectancy of 12 years or less
• Less than 65 years of age, but with a serious health issue an a life expectancy of 6 years or less
• Policy’s face amount; a policy face amount less than $100,000 may not attract much buyer interest
• Cost of annual premium payments to maintain the policy
• Loans on the policy
• Amount of cash surrender value
• While various types of policies may qualify for a life settlement, (e.g. Universal Life, Survivorship, Variable Life, etc.), Universal Life policies and term policies (if convertible) are the most commonly purchased policies.

What are the Most Common Reasons Senior Sell Policies?

By far, the most common reason seniors choose to sell their life insurance policies is to help pay for expensive medical treatment or long term care.

Premium relief is another major factor. Some carriers have raised their cost of insurance rates which makes maintaining a policy too expensive for many seniors.
Some seniors have chosen to sell their policies to avoid debt and pay for home improvements with cash, such as installing a new $20,000 roof, or financing a $50,000 home remodeling project for wheelchair accessibility so they can age-in-place.

Many financial advisors and estate planners are recommending clients sell their under-performing trust-owned life insurance policies when premiums begin to drain the assets from the trust.
Retiring business owners often sell their key person life insurance which has become irrelevant due to retirement.

Many seniors sell their policies simply because it’s a sensible and profitable exit strategy for an unwanted asset.

What’s the Next Step?

Once you have determined that you no longer need the protection and want to sell your policy, the next step is to choose a life settlement company that will assist you in obtaining the highest possible value for the policy.
When you contact Trust Life Settlements, we’ll explain the brokering process and why it is essential to a successful life settlement transaction. Working with us will help ensure that you’ll receive the highest possible payout for your policy.

To see if you qualify and to obtain a pricing estimate of your policy’s value, fill out this form on our website, or call us at 800-216-2513.