If you have a life insurance policy, you may wonder how much is my life insurance policy worth. While the answer can vary depending on the type of policy (universal, whole, term, group) and its details, understanding your life insurance policy’s worth is important in ensuring that you and your family are properly protected. 
The Value Of Your Life Insurance Policy
When exploring life insurance options, understanding your policy’s monetary value is critical. The death benefit – or pay-out amount upon passing away – relies on premium payments, age, and overall health.
For an accurate understanding of the worth of your plan, you should contact its issuer. If a greater value is desired, consider raising premiums or speaking with an expert to explore how other elements may affect the total sum.
What Does The Accumulated Cash Value Of A Life Insurance Policy Refer To?
The accumulated cash value of a life insurance policy is the amount of money you have built up in your policy over time. This accumulation occurs as part of the premiums you have paid into your policy.
A portion of each premium payment goes towards building up a cash reserve that can be accessed by taking out a loan against the policy, withdrawing money from the policy, or paying a surrender charge.
The cash value of your life insurance policy is typically much less than the face amount of the policy.
However, it’s important to understand that the cash value can form an important part of your overall financial planning for future needs such as college tuition payments, retirement income, and emergency funds.
What Is The Face Value Of A Permanent Life Insurance Policy?
The face value of a permanent life insurance policy is the amount of coverage that an individual will receive upon death. The policyholder determines this amount at the time of purchase, and it remains fixed for the duration of the policy.
The premium payments you make on your policy are used to pay for its costs, such as the actual life insurance coverage and any additional features like cash values or dividend accumulations.
The face value of a permanent life insurance policy should not be distinct from surrender value, which is typically much less than the face value due to fees associated with early termination or loans taken against the policy.
How To Increase Your Life Insurance Policy’s Cash Value?
Increasing the cash value of your life insurance policy is relatively easy. The most common way to do this is to increase the number of your premium payments.
However, you should also consider other options that can help maximize the growth of your cash value, such as choosing a policy with investment options or selecting a policy with built-in benefits like dividend payments.
Additionally, you can reduce the cost of your premiums, such as switching life insurance companies or shopping around for a better deal.
Benefits of Knowing Your Policy’s Worth
Knowing your policy’s worth gives you an idea of what funds will be available to provide for your loved ones should something happen to you. It also helps you understand if it’s time to increase coverage or adjust other aspects of your financial plan.
Knowing what your current policy offers can help make sure that all necessary financial needs are taken care of in the event something were to happen to you so that no one is left with any shortfall in funds or resources.
Additionally, knowing how much money will be available from your life insurance policies will give you peace of mind when making investments and other long-term goals for yourself and future generations.
How Much Could You Sell Your Life Insurance For?
The amount of money you can sell your life insurance policy will depend on several factors, such as the type of policy, the company it is with, and its age. It is important to note that selling your life insurance policy may result in a taxable event, so it is best to consult a tax professional beforehand.
Generally speaking, many individuals can receive 50-65% of the face value of their permanent life insurance policy in cash by selling it through a life settlement provider. If you are considering selling your life insurance policy, research potential buyers carefully and compare offers before making a decision.
When Could You Sell Your Policy To A Viatical Settlement Provider?
If you are a policyholder who has been diagnosed with a serious health condition, you may be able to receive the majority of the face value of your life insurance policy in cash by selling it to a viatical settlement provider.
A Viatical Settlement is a specialized transaction that allows individuals with serious illnesses, such as Cancer, ALS, or Alzheimer’s, to receive funds from their life insurance policy in exchange for a lump-sum, cash payment.
American Life Fund is the industry leader for viatical settlements and offers highly competitive offer for those who qualify. Get in touch today and learn more about their services.
What Are The Tax Implications of Selling my Life Insurance Policy to a Viatical Settlement Provider?
Selling your life insurance policy to a viatical settlement provider can have several tax implications. In general, any amount received up to the total premiums paid into the policy is typically tax-free. However, the amount received that exceeds the total premiums paid is taxable as ordinary income.
If you are considered terminally or chronically ill by the IRS standards, and you sell your policy to a viatical settlement provider, you may be able to exclude all or part of the viatical settlement from your income.
What Are The Qualifications For Selling my Life Insurance Policy to a Viatical Settlement Provider?
The specific qualifications for selling your life insurance policy to a viatical settlement provider can vary by company, but typically include:
Policy Type and Size: The policy should typically be a permanent life insurance policy (like whole or universal life) or a term policy convertible into a permanent policy, with a face value usually of at least $100,000.
Age and Health of the Insured: Viatical settlements are primarily intended for those with a life expectancy of less than two to ten years due to a serious, chronic, or terminal illness.
Policy Age: Some companies require the policy to be at least two or three years old due to contestability clauses in most insurance policies.
What Are The Benefits of Selling my Life Insurance Policy For a Viatical Settlement?
Immediate Cash: A viatical settlement can provide immediate liquidity to policyholders who need funds for medical treatment, debt reduction, or any other purpose.
Stop Paying Premiums: Once the policy is sold, the policyholder no longer needs to make premium payments.
Higher Value Than Surrendering: In many cases, selling a policy through a viatical settlement can yield a higher cash amount than surrendering the policy back to the insurance company.
Conclusion
Life insurance policies can have significant value in providing for your loved ones should something happen to you and as an investment option. Knowing the worth of your policy is an important part of managing your finances and understanding how it fits into your overall financial plan.
Knowing this information is essential for guaranteeing that your family has enough resources in the unfortunate event of something happening to you. To learn more about how you can cash in your life insurance early through a viatical settlement, contact us at American Life Fund today!
