Knowing when to sell your life insurance policy isn’t as easy as it might sound. Whether you’re diagnosed with a chronic illness, or you’re hoping a life settlement can ease your financial strain, choosing to sell a life insurance policy is a major decision. If you need a quick payout or help covering premiums, you may want to consider selling your life insurance policy. This is what’s known as a viatical settlement or a life settlement.
A viatical settlement is the sale of your life insurance policy. As the policyholder, you’ll sell your life insurance policy, either through a life settlement company or with the aid of your insurance company broker. This entitles you to a quick cash value, also known as the cash surrender value. You may sell your life insurance policy through a broker or third-party buyer for numerous reasons in the life settlement industry.
Why do people pursue life settlements?
In many cases, a policyholder needs the payout’s quick cash value to help you cover your medical expenses. This is particularly true if the policyholder is an ill patient or someone otherwise diagnosed with a terminal illness. An individual’s life expectancy isn’t the only deciding factor, though life expectancy is larger. One typical viatical settlement case involves ongoing expenses. You may still have premium payments to cover or ongoing costs through your insurance company. Since your fiduciary duty is to protect these, your life insurance’s cash surrender value can help you handle the expenses.
Also, most people buy life insurance to provide for their loved ones. If you don’t have any immediate family or beneficiaries, it may help sell your life insurance. There are plenty of different sellers, and their viatical settlement needs will vary based on their personal information. This is the case for many seniors. Often, seniors don’t always have family members or a living beneficiary of the policy. Without a beneficiary, you may be paying high premiums that you don’t need to. As a life insurance policyholder, there are several circumstances in which it’s in your best interest to conduct a life settlement transaction with a viatical settlement provider.
Be it a chronic illness, a need for your policy’s cash surrender value, or the best offer and a lump sum for an unnecessary life insurance policy, the policy owner needs to understand the specifics of the life settlement process. Here are some key components of how a viatical settlement transaction works as a seller and policy owner.
How do the top viatical settlements work?
A viatical settlement is a fairly straightforward process. You, the seller, have to decide that selling your insurance policy is in your best interest. The life insurance policyholder then meets with a viatical settlement broker to discuss policy transfers, the face value of the purchase, and how to navigate the sale with a life insurance company. The viatical settlement broker or viatical settlement company will then try to find a qualified buyer, often on the secondary market or through a third party.
A buyer or life settlement broker will buy your life insurance policy, pay any future premiums attached, and collect the death benefit when the policyholder dies. Depending on how much money is noted in the policy’s death benefit, some individuals will invest in the life settlement market. Often, a viatical settlement transaction or purchase more than covers the policy’s premiums if you go by the industry average. Even with surrender charges and cover any policy lapse fees, your policy’s cash surrender value may attract a cash payment sale.
A viatical settlement is the best choice for many individuals depending on some of the aforementioned key factors. If you have a financial planner or accountant, you may want to discuss life settlement payouts with them. A financial planner may ask about the amount of time you’ve taken to consider a viatical settlement or offer you a viatical settlement questionnaire to see if it’s the right choice for you. An advisor will do their due diligence to remain cognizant of the insured’s life expectancy, the amount of the death benefit, and how to conduct a life settlement. After all, it’s a lot of paperwork.
Where can you find the top viatical settlement provider?
Your success often hinges on working with the right viatical settlement provider. After all, regardless of your health status, a life settlement tells you part of the value of your whole life. That’s why it’s important to find a viatical settlement provider who puts you first. To start, look for a top settlement provider that has a license. Without a license, you may as well sell to the first person you meet. A financial advisor can often help you find licensed providers. Your financial advisor may even be able to help with the sale.
Also, look for a life settlement provider that has years of experience in the industry. You want a life settlement provider with a proven track record of getting quality results. In a good case, the right life settlement provider can even get buyers and institutional investors to bid on the whole life policy. This helps the life settlement process proceed in favor of the seller. A viatical settlement company should also be reasonable about the commission. If you’re working with a viatical settlement company that wants to take too large of a commission, that might be a red flag.
Going through the life settlement process is difficult for any policy owner. That’s why it’s so important that you don’t go through the life settlement process alone. Having the right broker on your side during the life settlement process can make a major difference. For seniors, those with complicated medical records, or anything in between, a broker can help you get the payout you need. Outside of that payout, the right broker will treat you with compassion and help you through this difficult time. Your financial needs come first, and American Life Fund is here to help.