Do you have a life insurance policy and either no longer want it or can no longer afford the premiums? For policies that accumulate money throughout the term of the policy often people would turn their policy in and withdraw the savings that accrued. This way not only will you no longer have to pay the premium but you may have some cash that can be used to spend however you want. However, there is now another option that can bring you even more money. This option is perfect for older couples who no longer have a need for the protection of a life insurance policy and for those hwo can no longer afford it. The option is to sell their policy to a third party.
Typically in order to withdraw the accumulated savings you turn the policy back into the company where you purchased it. But if you sell it to a third party the investor will buy the policy for a fixed amount. This is typically more than the savings that has accumulated but less than the pay out upon death. So, if you have $5,000 in savings and your policy pays out $100,000 upon death you will only get $5,000 if you turn it into the insurance company. However, if you sell it to an investor you will get more than $5,000 but not as much as the $100,000 payout.
One benefit of selling this way is to take the additional money and invest it in a higher yield investment. This can be earmarked for the same purpose of a life insurance policy but will accumulate cash faster and potentially more than a life insurance policy can. Younger adults who are looking for investment opportunities may find this a lucrative option. You can save money for the possibility of your death and ensure the security of your family. However, the money that is invested will have a higher rate of return
It may be difficult, though, to find a reputable investor. The way the investor makes money is to pay as little for the policy as possible while maintaining the premiums for as short a period of time as possible. In essence, the investor is banking on your death sooner than later. While this can be a rather morbid thought it can be beneficial under some circumstances. Typically those who are older than 65 with a life expectancy of over two years and less than fifteen are ideal candidates. For anyone looking to explore this option, be careful to shop around your policy to multiple investors to ensure you are getting the best possible price.
Another option is that you can use a broker. If you use a broker, though, make sure you are not paying exorbitant commissions and the majority of the selling price goes to you. There is also no regulatory commission watching these types of transactions so it is possible there are back room deals between broker and buyer. This will, unfortunately, cost you money. So, be sure you check out who you deal with carefully before making the decision to use a broker to sell your life insurance policy.
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