Aging IQ is a news aggregate designed to create a location for all of your senior news from holiday meal ideas to cutting edge research. The below article was originally posted on their website by the author below.
Author: Blake Gallimore | April 25, 2022
Depending on your personal financial situation, selling your life insurance policy could benefit your overall financial standing and open up doors to new endeavors. Many individuals are unaware that they are able to sell their life insurance just like any other asset, as it is often an overlooked option due to its lack of public awareness. A recent study showed that 90% of seniors would have chosen to sell their life insurance policy had they known the option even existed.
The process of selling your life insurance is referred to as a life settlement transaction. By definition, a life settlement is the financial transaction of an existing life insurance policy to a licensed life settlements buyer, like Abacus Life Settlements, for more than its cash surrender value, but less than its death benefit. The policy owner transfers their ownership and beneficiary rights to the institutional investment fund, and receives a lump-sum cash payment that can often be 6 times greater than the cash surrender value. It is important to note that the money obtained from the settlement that goes into the pockets of the policy seller can be spent entirely at their discretion—meaning there are never any strings attached.
One may decide that selling their life insurance policy is a good idea for them if they fall into one or more of the following scenarios, just to name a few:
- They can no longer afford premium payments
- Funds are needed to pay for medical or long-term care
- They want to re-invest the equity built in order to take advantage of a better opportunity
- Their overall life circumstances have changed (i.e. divorce, retirement, beneficiaries no longer require the policy benefits, absence of an estate tax burden, etc.)
Abacus Life has simplified the life settlement qualification process to ensure that it is transparent and straightforward; one must meet a few minimum qualification factors that are simply used as general guidelines. Each case is distinctive, so it is always best to reach out to an Abacus representative to see if your specific case qualifies for a life settlement. These factors are:
- Insured must own a policy of $100,000 or more in death benefit—usually, anything less does not qualify unless there are considerable health impairments
- Insured is over age 70
- Insured has experienced a decline in health from the policy’s first issuance