Different from other policy types: whole, term and universal, when you sell a group life insurance policy, it’s important to consider the following. To be able to sell it, you will need to convert it to an individual policy. You can only convert this coverage into an individual one if you are separated from employment through retirement or termination. Once you have an individual policy, you can almost certainly cash out.
If you are a Federal Employee and have been looking for a way to sell your Federal Employee Group Life Insurance policy, or FEGLI policy, check out our blog post How to Sell a Federal Employee Group Life Insurance Policy.
When you’re ready to sell your group life insurance policy, two main ways can happen: through a viatical settlement or life settlement.
In this blog post, we will discuss the process of selling your group life insurance policy and discuss some of the pros and cons of doing so.
What is a Group Life Insurance Policy?
A group life insurance policy is a type of life insurance typically provided by an employer. The policy covers all employees in the group, and premiums are usually paid in part or fully by your employer.
Group life insurance policies can benefit employees, as they often have lower premiums than individual policies.
Can I Sell a Group Life Insurance Policy?
In some cases, yes, you can sell a group life insurance policy. However, this may depend on the specifics of your policy contract. If you have a policy through your employer, you need to convert it to an individual policy in order to sell it. In order to convert the policy to an individual one, you must be separated from your employer through retirement or termination.
How to Sell a Group Life Insurance Policy?
When you decide to sell your group life insurance policy, there are two main ways that you can do this: through a viatical settlement or a life settlement. Here’s a look at the steps you need to take to complete either of these types of sales:
Viatical Settlement
If you sell your policy through a viatical settlement, you will work with a viatical settlement company, such as us at American Life Fund. We specialize in buying life insurance policies from individuals with life-threatening illnesses such as cancer, ALS, Alzheimer’s, or heart disease.
As your viatical settlement company, we will ask for basic information on your health status along with any information on your policy you have on hand. Once we verify this information, we provide an offer for your policy. You can then choose to accept the offer and proceed or decline the offer and keep the policy.
If you accept the offer, we will become the new owner of the policy. We will then be responsible for paying the premiums and receiving the death benefit when the insured passes away. In return, you receive a lump-sum cash settlement for your policy.
Steps For Applying For a Viatical Settlement
The first step is filling out our simple application. This application will give us some basic information about you and your policy.
Next, we will request additional documentation, such as a copy of your life insurance policy and doctor’s information, so we can request medical records on your behalf.
If you decide to move forward with a viatical settlement, we will offer you based on the information we have gathered. If you accept our offer, we will begin the process of transferring the policy’s beneficiary. Once the beneficiary has been transferred, you will receive a lump-sum cash payment for your policy.
Requirements to Apply For a Viatical Settlement
To qualify for a viatical settlement, you must:
- Be diagnosed with a serious illness.
- Own a life insurance policy with a death benefit of $150,000 or more.
Life Settlement
If you sell your policy through a life settlement, you can sell your policy to a life settlement company. You don’t have to have a serious illness to qualify, but you need to be 75 years of age or older. You also must have a life policy of $150,000 or more.
A life settlement allows you to sell your life insurance policy in exchange for a cash payout. This means no more paying pricey premiums—as payments become the responsibility of the life settlement company purchasing your policy.
Steps For Applying For a Life Settlement
The first step is finding a life settlement company you are interested in working with, such as us here at American Life Fund. At American Life Fund, we specialize in both viatical and life settlements.
Next, you will need to provide the life settlement company with information about your policy, such as the death benefit amount and the premium amount, along with basic medical information.
Once the life settlement company has this information, they will make you an offer for your policy. You can then choose to accept the offer or decline and keep your policy.
If you accept their offer, you will sign over the beneficiary of your policy to the life settlement company and receive the agreed-upon payment amount.
Requirements to Apply For a Life Settlement
To qualify for a life settlement, you must:
- Own a life insurance policy with a death benefit of $150,000or more.
- Be at least 75 years old.
What Are The Benefits of Selling a Group Life Insurance Policy?
There are a few benefits of selling a group life insurance policy. First, if you are no longer employed by the company that offered the policy, you may be able to get out of paying premiums, which can become costly over the years. Second, selling a policy with a high death benefit can provide you with a lump sum of cash that can be used for anything you need.
What Are Some Things to Consider Before Selling my Group Life Insurance Policy?
Before you sell your group life insurance policy, you should consider a few things. First, you must ensure that you understand your policy’s terms. Second, you need to be sure that you are getting a fair price for your policy.
You must also be aware of the tax implications of selling your policy. When you sell a life insurance policy, you must pay taxes on any profit you make from the sale. This is because the IRS views a life settlement as an asset sale. However, with viatical settlements, insureds are exempt from taxation with the sale of their life insurance policy. Learn more about Viatical Settlement Taxation here!
How Much Can I Expect to Get From Selling my Policy?
The amount of money you can get from selling your policy will depend on a few factors, including your policy’s death benefit, premium payments, your age, and your health.
Selling Your Group Life Insurance Policy
If you have a group life insurance policy that you no longer need, you may be able to sell it for a lump sum of cash. This can be a great way to get money for anything you need, whether you want to pay off debt, fund your retirement, pay for medical treatments, or whatever else you need funds for.
If you are considering selling your group life insurance policy, contact us today to learn how we can get you the most for your policy!
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